How to Negotiate With Contractors for Home Remodeling Projects

Maybe you want to turn your semifinished basement into a bedroom for your growing family. Maybe you want to give your 1980s-era kitchen a cosmetic makeover, or maybe you just want to refresh your property before you put your home on the market.

No matter what your motivations are for remodeling, you’re going to need a good contractor. Finding a good contractor who won’t break the bank is tough.

If you've read about the best way to renovate a house, you’ll note that one of the biggest challenges house flippers face is finding an experienced, trusted contractor who can do the work under budget and on time.

Your home renovation is a collaboration between you and your contractor. Even after you find your contractor, much of the project’s success will depend on how effectively you negotiate at every step in the process.

Here are some of the most effective ways to negotiate with your home contractor.

Don’t Create a Confrontational Relationship

A lot of homeowners assume contractors are always out to pad their estimates, cut corners, and extract as much money as possible for the least amount of work. But if you approach contractors with suspicion and openly question their intentions, you’re going to have a toxic relationship.

Treating your contractor with dignity and trust will establish a relationship that will help you solve problems together when they arise — and most home improvement projects will run into unforeseen problems.

Openly Get Multiple Bids

When you’re soliciting estimates and interviewing candidates, let each one know that you intend to contact multiple contractors for bids. Three to five is a good starting point.

This will let contractors know that you’re trying to keep costs reasonable, and they’ll adjust their bids accordingly. Just like demand among buyers drives home prices up, competition among contractors keeps costs down.

You may be surprised by the discrepancy in different bids. Calculating how much a renovation will cost is nowhere near as straightforward as calculating what you'll owe in real estate agent commission fees.

If the estimates you receive are higher than you anticipated, don’t be afraid to abandon your renovation plans. Interview a few real estate agents about selling your house as is.

Ask for References and Do Your Research

Once you have your list narrowed down to some promising candidates, it’s time for your due diligence. Ask each contractor for information about their licensing, bonding, and insurance. Find out if they’ve completed projects similar to the one you’re planning.

Read online reviews, and ask for references from previous clients. Ask them about the quality of the work, final costs versus initial estimates, and if the contractor was able to meet deadlines.

There are many great contractors who do high-quality work but may not have a lot of experience. You can often get great rates from contractors who are just starting out, but there may be some risk involved.

Be Detailed About What You Want — Including Your Budget

Whether you bought a bargain property that needs a gut renovation or you want a little deck in the backyard, be as specific as possible when you lay out the parameters. Any ambiguity forces the contractor to make decisions that you may not find satisfactory, and it could lead to conflict down the line.

When it comes to your budget, always set it lower than you can afford. Contractors don’t always exceed the budget, but if you set it low to begin with, a few added expenses won’t break your bank.

If you state your maximum budget from the start, and the cost exceeds it, you’ll feel the squeeze. If you’re paying for your remodeling project with a credit card, you’ll feel the squeeze more than once as high interest multiplies the financial pain.

Always Get Everything in Writing

Once you’ve settled on a contractor, make sure you get a detailed blueprint on paper. This should include itemized quotes for all materials and labor, a timeline, and an estimated completion date.

The timeline isn’t entirely under the contractor’s control, but it gives you both a rough target to aim for. Check in on the work periodically to make sure the budget isn’t surpassed and the project is on schedule.

Time Your Project for the Best Rates

There are certain renovations you should always negotiate. Timing can make a huge impact on how successful you are in negotiating with your contractor.

If your completion date is flexible, hiring during the slow season can give you a lot more leverage than if you're soliciting estimates during the hectic spring and summer months.

Before and after the winter holidays can be a great time to hire a contractor who isn't in high demand and may be more willing to compromise on price.

Buy Materials Yourself — Pay Only for Labor

Contractors don’t always hunt down the best prices for the materials they buy. Busy contractors simply don't have the time to drive all over town comparison shopping for each individual item they need.

An easy way to bring costs down is to acquire the materials yourself and pay the contractor for time and labor. Just make sure you can, in fact, get better prices than the ones quoted in the estimate. Double check the quantity of materials with the contractor so you don’t buy too much or too little.

Ask How They'd Keep Costs Low

No one knows more about the ins and outs of the work than the contractor. Ask them if there are places where you could “trim the fat,” for example, by substituting less expensive materials.

Ideally, you’ll want to do this before the project actually begins. If you discover early on that the work is projected to go over budget, don’t be afraid to step in and ask if costs can be reined in. Most contractors will be happy to help.

Know Your Last Resort

The worst doesn’t usually happen, but that doesn’t mean you shouldn’t prepare for it. Sometimes, a contractor can’t or won’t fulfill the terms of the agreement, and you’ll reach an impasse.

If you’ve already received the materials you’ve paid for, you can simply fire the contractor and hire someone else. If you haven’t received all that you’ve paid for, you can take the contractor to small-claims court. If the amount is higher than the small-claims limit where you live, you can sue.

You can also file a complaint with the contractor's licensing board in your state, the Better Business Bureau, or various online review sites. Although this won’t get your money back, it might make you feel better and prevent future clients from repeating your negative experience.