So I am looking at this project to finish this house via an attorney and the bank. I gave them a price and they said it looks good so “I am the guy”…but they don’t want to sign the contract and give me the initial deposit until the bank approves me…which requires me getting all this paperwork in and upgrading my insurance policy as the bank wants almost double the coverage I carry.
I don’t have a problem doing all that but don’t want to lay out the cash for the policy increase and all unless I am guaranteed the job by means of that signed contract and initial depo.
I want the job just don’t want to do more paperwork and layout about $3k just for them to say…”Naa, we’re going with someone else” a few days after I get the stuff to them.
Its happened to me before so I am a bit gun shy.
Thoughts?
Replies
Tough decision. I had a "sure thing" earlier this summer. I spent about 8hrs working on proposals and going on-site to talk to various bank reps.
A $50000 sure thing job turned into a $10000 band aid fix up then totally dissolved.
I had a feeling from the start.
I guess the big question is how much will you have to pay out to get approved by the bank and can you afford to lose it?
Edited 7/30/2008 4:52 pm ET by MSA1
MSA1,
Well, I already have a number hours in it and don't mind spending more "time"...just don't want to spend any of MY money in the process. I can just see getting it all done and ready and some high school kid on the other end of some phone line say "No, we didn't like this or that about his paperwork. Find someone else"
Been there before and you have absolutely no recourse.
Mike
Thats the problem working with banks and underwriters. I could go on for hours about underwriters and they were the ones (partially) that killed my deal. Luckily I didnt lose out of pocket, just in time.
I know time is money but i'd rather lose money abstractly then out of pocket.
Yeah, the part that gets me is ALL these other folks (bank, insurance agent, atty) are getting paid to be pat of this process no matter what the outcome. I seem to be the only one that could lose money! Hell, even the contractor that abandoned the job walked away with money! :)
I agree...losing POTENTIAL earned money is one thing but losing cold hard cash is another!
i'd just tell em the deal. they sign a contract,you get the ins before any work starts.'if they don't want that get a 1500.non refundable deposit,at least it would half cover it.
if they say no to both,don't let the door hit ya on the way out. someones got to be the alpha dog and they already have a lawyer in place. larryif a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
3k for insurance? You must have some damn good coverage.
As far as paperwork goes, I'm finding that anytime the bank gets involved I have 6-8 hrs of prep time for filling out paperwork, registering in the city, getting a bond, breaking down costs, listing subs etc...
Its just something I chalk up to the process. It really sucks when the job falls through.
Good luck. Hope you land it.
FCOH,
Insurance in Florida is outrageous only because there are so many BAD contractors (or unlicensed ones!) who have left jobs unfinshed or ripped people off. Now the industry has made those of that play by the rules and do the right thing, the ones who pay. What can ya do?
Mike
I was recently on the other side of something similar to this.
I hired someone to serve as a consultant on my construction project. My bank insisted that he fill out some paperwork and pay some fee to be "registered" with the state. I paid that fee, since it was a cost directly associated with my job. I offered to pay for my consultant's time in filling out the paperwork, but he declined.
That seemed fair to me. He only incurred that cost because of me. He didn't make any profit on it. He was just jumping through a hoop because I asked him to. How could I expect him to pay for it in the HOPE that he'd make it back later?
Maybe a similar arrangement would work in your situation. Tell your clients that if they have this additional requirement (more insurance), that will increase your cost by the same amount. Maybe volunteer your time as a good faith gesture, let them pre-approve you in every way except the insurance requirement, but tell them the insurance premium is THEIR responsibility.
Seems like they could sign an agreement with you "pending approval by ####"?
Jon
Hector,
Thats actually what I was thinking about doing. Tell them they pay for the necessary fees and my time is gratis. If the bank denies me as the contractor, they are only out the fees and I am only out time...
Thanks
I've been in that position too. My best advice is to be very direct in speaking about the insurance premium. Then suggest that a pre-contract agreement, one which stipulates under what circumstances you'll be paying for the additional coverage, be written up and signed by both/all parties.
My last big job had some insurance requirements in the contract. After the contract was signed I met the reqs and got them the paperwork. Same as you... no way I'm going to jack up my policy for a maybe job.
Similarly, my contract requires the owner to have their insurance configured a certain way. Whether or not they do it I may not know, but it's there in writing and they sign it.
I cant tell you how many times i filled out paperwork for people to buy houses to do the roof and then drive by and see they had the gin mill crew there.
They needed official paperwork by a bonded and lic roofer.
If i ever asked they laughed at me just tough.
My policy after that was i will give you a contract to sign and i need a down payment before i give you paperwork to take to the bank.
A roof would be different then what your doing though