Proposals / Contracts

I grouped these 2 types of documents (mentioned above) together because basically, proposals are un-signed contracts and contracts are arrived from proposals (with a few exceptions).

  • I’m not going to inform you that proposals / contracts should be “ in writing “ opposed to being “ verbally “ . I’m sure you heard this on television shows such as “People’s Court” and “Judge Judy”.
  • I’m not going to tell you that proposals from companies will range from being very vague to being extremely explicit in description of rendered labor & goods because I’m sure you had proposals / services presented to you in the past.
  • I’m not going to tell you (at this point) what should be legally specified in a contract because you can research this information on line.

What I want to tell you is what you may never be able to find by researching the internet, nor conversations with fellow associates or reading published books about guidance & assistance because what I have to share will not be found.

I’ll start prior to you calling up contractors to receive quotes of your proposed home improvement project. Even thou you may be a little naïve about actual construction terms, names of various types of materials you will eventually learn this during this process and prior to signing a contract. Your objective at this point is to “Control the bidding process “.

Since Extremely vague proposals may be done purposely, with the objective to give homeowner a false illusion that their receiving a great price when in reality the price is extremely low because there’re a lot of omissions and contractor supplying inferior merchandize / material. You now knowing this, you should counter act by doing following…..

  1. Provide a list of all merchandize related to your project that you’ll personally need to select based on your preference & personal taste to these contractors. Some possible examples are listed below highlighted in red along with a generous value highlighted in Blue. The sub-total value of these individual items is highlighted in Green. To offer you a comparison cost to the possible contractor’s selection, highlighted in brown to illustrate my point.
  1. Floor tile (bathroom) $ 5.00 sq. ft. (Need 48 sq. ft.) $ 240.00 $2.00 sq. ft. $96.00
  2. Wall tile (tub area). $ 5.00 sq. ft. (Need 66 sq. ft.) $ 330.00 $ 2.00 sq. ft. $ 132.00
  3. Floor tile (kitchen) $ 5.00 sq. ft. (Need 250 sq. ft.) $ 1,250.00 $ 2.00 sq. ft. $ 500.00
  4. Laminate flooring (2 bedrooms) $ 2.50 sq. ft. (Need 375 sq. ft.) $ 937.50 $ 0.99 sq. ft. $ 371.25
  5. Toilet / seat $ 225.00 ( need 1 ) $ 225.00 $ 99.00
  6. Carpet (living rm) $ 35.00 sq. yd. with install (need 35 yds.) $ 1,225.00 $ 25.00 sq. yd. $ 875.00
  7. Bathroom vanity ( with top-bowl-faucet) $ 500.00 (need 1 ) $ 500.00 $ 300.00
  8. Exterior sliding door $ 900.00 ( need 1 ) $950.00 $ 350.00
  9. Medicine cabinet $ 150.00  ( need 1 ) $ 150.00 $ 75.00
  10. Exterior light fixtures $ 45.00 each ( need 2) $ 90.00 $25.00 each $ 50.00
  11. Interior light fixtures $ 45.00 each ( need 4 ) $ 180.0 $ 18.00 each $ 72.00

Total of all your selected merchandize highlighted in Green is $ 5,752.50

Total of what contractor may have supplied if you didn’t control bidding process is highlighted in brown. $ 2,920.25

A difference of $ 2,832.25 prior to tax, with tax a $ 3,000.00 + difference. This one example illustrates that if you received a quote $ 3,000.00 less expensive then another, in reality, it was only due to receiving inferior merchandize.

It’s more likely that during the beginning stage of receiving quotes you haven’t had time to go to supply stores to select these aforementioned merchandize items, if so, then arbitrary select an amount for each item, and if your uncertain in accuracy then let the 1st contractor select amount, the objective is for each contractor to include the same value in merchandize so you can compare “Apples with Apples “, regardless if your eventual selection is more or less than designated guess. If less, you should receive the credit difference, if more, you just pay the difference. 

To continue with the same premise, there may be other materials related to your project that appear similar in appearance and function that drastically range in cost. These examples are………

(1) “Sheathing “which comes in 4’ x 8’ sheets that are installed on roofs, exterior walls & floor joist. They come either in a “wood plywood” sheet or a “compressed flake type “sheet, which is half the cost of wood plywood. For example if you were constructing a 20’ x 20’, 1 story addition with a gable style roof you’ll need a total of 50  4’ x 8’ sheets (floor, exterior walls & roof). At a difference of $ 12.50 per sheet it comes to $ 625.00 plus tax.

 (2) “Roof shingles “, they may look similar in color, however one could have a 25 year warranty and other have a life time warranty. This translates to a cheaper product.

(3)”Vinyl siding “they may look similar however a difference in quality. This translates to a cheaper product.

  • Gutters, difference in thickness or gauge. This translates to a cheaper product.
  • “Underlayment “(top layer of sheeting in preparation of finish flooring) (1) flake type, least expensive (2), plywood , middle range (3) concrete board , best, especially for tile . This also translates to a cheaper product

If you the homeowner prefer the less expensive product , that’s fine , however this should be presented to you as such and not you be scammed by an immoral company looking out for their best interest and their motive of presenting a false facade of a reasonable quote and neither asking or looking out for your best needs / interest. To combat this, once again control the bidding process by requesting the type of sheathing, warranty of roof shingles, brand name of siding, gauge of gutters and type of underlayment being offered in there quote. Your putting these contractors “on notice “that you’re educated enough to understand the differences.

These suggestions of advice I’m offering is still only the beginning. I also provide three “Printable Checklist “located on my web site home page, right column, titled “View Checklist” to further educate you grading contractor’s performance during the gathering of information stage.

Once you receive proposals you should carefully read and look for omissions or ambiguous wording. Don’t assume all contractors are providing the same services, such as (obtaining permits, dumpster rental and portal toilet rental on large projects, interior painting, electrical fixtures, etc.)

To give you an example of “Ambiguous wording “, don’t accept the following wording (highlighted in red) in either a proposal or contract.

“All Electrical will be to code “ & “All Heating will be to code “& “All Building will be to code “

In reality, it’s not required by Electrical Code to supply an exhaust unit in a bathroom if the bathroom has a window, it’s also not required to have ceiling fixtures in bedrooms / living rooms, instead a switch can operate homeowner’s lamp that is plugged into a wall outlet. It’s not required to have a light over vanity if there’s already a ceiling light. Not required to install a door bell, telephone / television jacks or extend cable to newly created rooms nor an exterior spot light. Only required to supply 1 wall outlet in a garage when more than 1 would be expected / needed.

In reality, it’s not required by Heating Code to place a new addition on a separate zone, which may be preferable by homeowner.

In reality, it’s not required by Building Code to supply gutters, providing a folding set of stairs into an attic opposed to a ceiling trap door, accessible by a step ladder.

The remedy is to request all provided services be individual mentioned opposed to being included by those statements mentioned above in red. You the homeowner should also receive (if it’s part of the project) brand name, model number, efficiency rating on all equipment (examples are furnaces, boilers, heat pumps, central air condition units ) because they can drastically range in price.

Another word of advice during the “proposal stage “, if you have a “ Wish List “ of other potential work besides the main project your considering , you should request and receive quotes from them. It could be skylights, increasing size of deck or adding a 2nd set of deck stairs, upgrading from carpet to wood flooring, etc. Your objective is to “Lock them in “with a cost while you still have not decided whom you will hire. By doing this you will receive a more competitive quote. If you wait and initially ask while the project is in progress the cost most likely will be more expensive because this contractor knows they are not competing against anyone else. You must realize homeowner has the “leverage “prior to signing contract.

Another word of advice during the “proposal stage “, don’t state you will directly purchase some of the merchandize, for example toilet, vanity, faucet or tile. By doing so, you are now liable / responsible for warranty & condition. For example if you purchased a toilet or vanity that was delivered in a cardboard box not yet opened or inspected and during the moving of these boxes or installation of these items the contractor accidently damaged this item , well they can in turn tell you it came damaged and you would be responsibly in delay and replacement. If contractor supplied these items they would be totally liable. Or if you later had malfunction issues with toilet or faucet, you the homeowner will be responsible in the cost of replacing merchandize and the labor fee to remove and replace. If contractor purchased they will be responsible for replacement and removing / installing. Homeowners may be unaware when purchasing many boxes of tile that you would also check the “Lot Number “on each box to assure these “lot numbers “match. If not, these same tiles can be a couple shades off. If homeowner purchased they will be responsible for any delay to reorder or worse, pay to remove tiles that don’t match that may have already been installed.

Now let’s talk about the transition from Proposal to Contract.

Once you confirm licensing , proof of insurance , referrals and experience as outlined in previous articles under this same heading “ Reading in between the lines “ and you fully read & agree to language in proposal , then the remaining stage is the presentation and eventually signing of Contract.

You should request that the Contract be e-mailed / faxed or postal mailed to you opposed to contractor bringing to your home and expect you to sign “ On the Spot “. 

By requesting contract beforehand, this will give you ……..

  1. Time to fully read and understand entire contents.
  2. Make notes on items you don’t understand.
  3. Notice items that were omitted from earlier discussions.
  4. Time to negotiate on items you don’t agree ( start & completion date , payment schedule , etc )

You must understand that since the contractor is the “ Author “ of the contract certain language / terms are going to benefit / protect their best interest of which you may of never priory discussed or agreed to . For example shown below, highlighted in red would be such terms / language, highlighted in Bold black is my “insight regarding this matter, highlighted in Green would be your counter offer.

  1. Starting date is within 4 weeks of signing contract and completion date will be 16 weeks from starting. Required to give a starting /completion date. If project exceeds completion date there will be a penalty of $ 100.00 a day until completed.
  2. Payments will be paid as follows…. 20% upon signing contract , X amount upon Starting of foundation ,X amount upon Starting of framing , X amount upon Starting of roofing ,X amount upon Starting of installing windows & siding , X amount upon Starting of mechanical work , etc. . This payment schedule favors contractor because the key word they mention is “Starting”. A contractor can start many phases and complete none thus unfairness to homeowner on monies paid compared to work rendered. Request to change to word “ Start” to the word “ Completion “ , this way you’re paying for what was done thus monies paid are equivalent to work rendered. Also, since contractor was “Author “most likely the payments are “Top heavy “with minimal amounts toward the end. Homeowner should request larger payment amounts toward the end, to be an incentive for contractor to complete project opposed to walking away or enough money remaining to pay another contractor should first contractor refuse to correct work homeowner not happy with.
  3. Final payment upon completion of project. A contractor can complete a project and never request / receive a final inspection approval from building department or receive a Certificate of Occupancy if also required. Homeowner should state, final payment upon completion of project along with receiving final approved Building Department documents.
  4. Additional cost will occur (three examples). (1) If during the stripping of old roof shingles we encounter rotten roof sheathing. (2) If during demolition stage we uncover any code violations or damaged materials that were not possible to see during field inspection. All items 1-2 are possible and unpredictable. However you should put language in contract that protects you so that you will not be taking advantage of. For example, item number 1, Request a pre-determined square foot cost on replacing roof sheathing that’s acceptable and agreed upon. Similar to requesting a quote from a “Wish List “item. This way you will receive a more reasonable price. Item number 2, it’s different to negotiate a pre-determined cost because the variables are endless. Hopefully this contractor is reputable & honest. However the one thing I could recommend to counteract their point / reasoning of charging because these code violations or damage was not exposed to see. I would recommend to state……. Any pre-existing item / equipment / conditions that were readily available for contractor to clearly view / evaluate will not deem an increase in cost if later needed to be installed. Some examples, if contractor request an additional cost of upgrading the electrical panel because later on during the rough electrical work the electrical contractor states there isn’t enough room for all the electrical work in the existing panel box, then this required work will be done at no additional charge to homeowner because this should have been noticed and would be an unexpected hardship to homeowner and was noticeable. Another example, when building an addition and the existing exterior water faucet has to be relocated and contractor wanting to charge extra for their oversight.
  5. Usually the contractor will specify in the contract the size / thickness of certain materials being installed. such as…….. We’re providing (1) 2’ x 6” ceiling joist, 16” on center. (2) 2” x 6” rafters, 16” on center. (3) R-19 insulation in exterior walls. (4) 8” thick foundation wall. (5) One battery operated smoke detector in each of the 2 bedrooms. During the applying of the Building Permit process this contractor was informed by the Building Inspector that 2” x 8” ceiling joist and rafters are required by code not 2” x 6”. Also a thicker insulation is required in the exterior wall and foundation by code needs to be 10” thick and both smoke detectors need to be “Hard Wired “opposed to battery operated. Contractor may approach you and state……. I have to charge you extra because I’m providing material larger / thicker in size as outlined in the contract. Homeowner should include this phrase in all contracts. Providing / installing correct size / thickness / specifications of any material is based on present Building Code requirements and not what is necessarily mentioned in contract. Proper Code requirement will supersede language in contract at no additional cost to homeowner. This will also include items that contractor omitted. It’s the contractor’s responsibility to be up to date on all code requirements. It’s possible this contractors quote was more attractive in cost because they “undersized “and “made “omissions”.

Also, as I earlier mentioned, receiving contract beforehand you may notice emissions of earlier mentioned items / services that were promised that were omitted.

Once all your request / concerns are settled between parties then request to see the revised contract to confirm, once done, happily sent up an appointment for the signing and giving deposit.

You the homeowner should not feel that you are over stepping your bounds, you worked very hard for your money and want to make sure you’re protecting your best interest.

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