How to Haggle With A Contractor???

I subscribe to Money magazine. The June 2009 issue had an article that almost made me leap out of my easy chair when I read its title (the title of this blog post). What I read made me feel even more incredulous at how some contractors approach their trades!

The premise of the article was that the publishers solicited advice from various contractors (painters, plumbers, electricians, flooring specialists, cabinet makers, etc.) to help homeowners haggle with contractors so they can “cut costs, not corners.”

The first two “experts” advised customers to get multiple bids (at least three) so you’ll know the market price range for the job. And let them all know you’re getting three (or 10) bids, to keep them all honest.

First, what guarantee do you have if you get three bids that you’ll have anything even close to the “market price range for the job?” You’ll just have the range of the three people you talked to, and they may (or may not) be good contractors and therefore their bids may (or may not) reflect the “market price range for the job.”

One expert had some good advice-draw up your specs before getting bids and have the bidders bid on the same specs rather than let each contractor offer their own solution. (I must point out they were not saying the homeowner should design the job themselves, but merely specify things like color, tiles, hardware. To that I would add energy efficiency and sound ratings.) But then he advised homeowners to get itemized bids and compare the costs apples to apples. In other words, cherry pick the contractor!

Unless you are conversant with job bidding, how would you know that the red tiles quoted by flooring contractor A were an apples to apples equal of the red ones bid by contractor D? You wouldn’t know, so this is dumb advice too.

Two more experts suggested homeowners dangle incentives before their bidders. One suggested the homeowner should offer to pay the subs and suppliers directly (which lets the homeowner know your exact costs, doesn’t it?). Of course, implied in this is that you’re screwing the contractor out of his markup on materials and subs. Do that enough, Mr. Dealer, and you will become a bankruptcy statistic!

Another expert suggested you have the contractor lean on his subs for price concessions. That might work in a bazaar in Timbuktu. I don’t think it has much merit for America right now.

Another bit of advice said to play your hand and then shut up. For example, if the contractor says the job will take $9,000, come back with “My budget is $7,000,” and then clam up. The advice from this sage is “he who speaks first loses.”

Bull! The best way to sink that ship is wait a few seconds and then say, “Mr. Jones, my mother taught me when I was a lad that silence was consent. Was she telling me the truth?”

I think any contractor who puts a price on the table without first establishing the homeowner’s budget is a fool anyway and deserves to be handed the “silent treatment.”

And don’t tell me a contractor cannot get the customer to divulge his budget. I did it all the time. If he does a great job of establishing trust and rapport, it is just as easy to ask, “Have you set a budget for this project?” as to not ask and then guess and end up priced out of the ballpark. Most customers won’t have a budget, so you can work with them to set one.

It goes like this: “Well, can we work together for a minute to establish one? You see, I have literally thousands of combinations of units I can bring to this problem and the prices will vary a lot based on the combination. If I know what you are comfortable with, I have a better chance of finding a solution that will please you.” Most folks would be ok with that. Then, to set the budget, start off, “Let’s suppose we went top-grade all the way and the job came to $12,000. Would that be out of line?” The customer gasps, “Twelve thousand! Are you nuts?” You reply, “I am just looking for the ceiling. Obviously $12,000 is too much. Suppose the job came to $9,000. Would that be more acceptable?” And so on until the customer indicates the range you have found is workable. (A variant is to cite monthly payments instead of the lump sum.)

Now here’s the catch. What if their range is well below what you need to charge for the job? You then say, “There may be a problem. In my experience, solving the issues you want to address cannot be done for that low a number. Are you willing to give up some of your requirements for me to meet your budget, or do you want to reconsider your budget and meet all of your requirements?”

Perhaps the best advice of the column was the last one: “Choose the guy who’s best for the job and then talk budget.” I can work with that and create a great solution (most of the time) for the money the customer wants to spend.

In the months ahead, I will be placing some sales training materials in my web-site’s “Shop” that you may want to consider and purchase. Check back from time to time to see what new is on the shelf!