Contract Agreement for Floor Job - Advice Needed

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  #1  
Old 04-23-08, 03:05 PM
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Contract Agreement for Floor Job - Advice Needed

I was hoping for some advice on how to finalize a contract I am completing with a contractor/construction company for a flooring project. Unfortunately due to a number of reasons I was unable to make this a DIY project and have turned to a professional!! Being my first major project Iím not very knowledgeable at negotiation/planning, and looking for tips:

1) What percentage of the total cost should I be putting down? Total project cost will be about 6500-7500 depending on a few variables - I estimate 2500-3500 of that will be materials (see #2). Contractor is reputable and has done work for two friends of mine without problem; but I am still uncomfortable providing too much cash upfront.

2) I was quoted with a fixed price for labor and material on this project (removal/hallaway, leveling/subfloor, install of new hardwood). I am looking for ways to cut costs by possibly obtaining some material at discount, but the contractor is reluctant to breakout the actual cost of the hardwood, and claims I'm not going to be able to get cheaper then he provides. This sound abnormal, and any advice on best way to handle? We are meeting face to face later in the week to finalize and writeup contract.

Thanks all, posting and browsing forums have been a lot of help!
 
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  #2  
Old 04-23-08, 04:16 PM
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Check your state's tax laws. Installation labor is typically not taxable. Sales tax is paid on the amount for materials. These should be separated on the invoice for the customer. If the materials and labor are bundled together, then tax is due on the total amount. Your state may require tax on labor for installation on taxable materials. In that event, the materials and labor are bundled together on the invoice and taxes are paid on the total amount.

How many quotes did you get? It is recommended that you get at least three. The lowest bid is not always the best, but it can help with learning about the contract process and how the contractors propose to accomplish the job. Most contractors tend not to have a problem with sharing with customer material costs and labor costs.

Contractor should have a state license and be able to provide you a copy to confirm with the state that it is active. He should have both liability and workers compensation insurance. Liability covers your property in the event of damage. Workers comp covers a worker in the event of injury on the job. Your homeowners will not cover workers injuries. Copies of insurance certificates should be supplied and verification made with agencies to confirm that they are active.

That's the way it's supposed to go. But, depending on where you live, you may have to settle for what labor is available. There may not, unfortunately, be certified, licensed, insured installers.

Contractor has a basic charge per SF for removal, for surface prep, for installation. There are are extra charges for stairs, baseboards, etc. They have to know how much to charge for labor on each aspect of the project, or they would not be able to quote.

If you know the brand and quality level of the flooring, you can check with local retailers to find out what they are selling the product for. Contractors who do regular business with retailers often get a discount.

Every flooring retailer or contractor is different in the amount required for downpayment. Many flooring retailers charge 50% down and 50% when complete. A payment plan is usually part of the contract--for large projects, so much down, another payment mid-way the project, and final payment when job is complete and customer satisfied.

While many squirm at the idea of making a large downpayment, the flooring contractor usually needs enough to pay for the flooring to start. Depending on if he has some guys working for him, he has to meet payroll each week. You have gotten references from friends, so the guy sounds like he must be trustworthy. Ask your friends about the contractor's payment plan. Have you seen his work at your friends' homes?
 

Last edited by twelvepole; 04-23-08 at 04:38 PM.
  #3  
Old 04-23-08, 04:24 PM
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"twelve" is correct about the sales tax on labor only. Everyone pays tax on the materials.

Always get another or, at best, two other quotes! That will clarify what he is charging. I would never go with only one quote on a project of this size. Get references too and call or go look at there work.
 
  #4  
Old 04-23-08, 04:42 PM
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1) Has he asked for a percentage of $$ upfront? I know you're going to meet him this week so perhaps it wasn't said already. Doesn't hurt to ask him or tell him how you feel and how much you are willing to front so you're comfortable. From what I know, fronting the material cost would be good. Heh...at least even going that way, you'll know how much the material is! I always think a good contractor (or sub-contractor) who doesn't want any money upfront is great. That's satisfaction guaranteed.

2) As the others stated, get a couple more quotes. Get some quotes from a sub-contractor. Maybe you know someone who can refer you to one? I don't see why you couldn't get your own material but most likely the contractor is right about getting it for cheaper. Afterall, he's a contractor. You can still shop around and see what you could come up with. From what I know, it's not abnormal for him to not break it all down. However, a guy who's going to want to have your business will do it if he thinks he's worthy. Don't hesitate to ask him tons of questions when you don't understand something. Just remember, you're his customer, he wants your business.

The best part of the deal you have going with right now is that you have 2 friends that didn't have a problem. THAT is always a plus.
 
  #5  
Old 04-23-08, 05:58 PM
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Thanks for the responses, they are very helpful.

I did receive a total of 5 quotes; of those I considered three to be competent enough to complete the job. I have decided based on total cost, referrals, and general knowledge to use this one particular contractor. His price is actually on the higher end of my average, but I think will lead to the best quality.

I have not been quoted a initial payment amount, that discussion will come when we meet and put his verbal offer on paper. Personally I like paying for services when complete; but understand a portion is needed upfront. Just looking for an idea of what to expect.

After seeing the contractors samples and brands as suggested I will do some home work with vendors to ballpark the supply cost.

Please feel free to offer any further advice, I feel a bit overwhelmed but am making progress!!
 
  #6  
Old 04-23-08, 06:23 PM
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Hi,

Looks like you've been getting lots of good advice! I hope you'll make a decision that is successful.

You may be interested in this thread that was posted recently in the General Chat Forum.

http://forum.doityourself.com/showthread.php?t=342564

Connie
 
  #7  
Old 04-24-08, 05:18 AM
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On our recent job, the contractor terms were as follows:

50% payment when flooring is delivered to site for acclimation
25% payment when install is completed, before site finishing
25% payment upon completion and acceptance

I viewed that as absolutely fair. Perhaps you could suggest something similar. With the above terms, the contractor has some exposure if you bail out of the job after he orders material (despite the contract) so had he included a 10% or so "restock" fee in the terms, I would not have been adverse to that.

For any job where it is the industry "standard" is to pay anything upfront, I research the heck out of the contractor. I research many areas, but the best way I've discovered is to find out where he sources his materials. There really is no good reason for them to hide this. Then I go to that place of business and 1) ask if the contractor is current in his account and 2) if they would recommend him. You would think that some places might be hesitant to disclose this information, but so far not a single business has declined to respond. Even if they did, their reactions to the questions can provide valuable insight. Good luck.
 
  #8  
Old 04-24-08, 05:30 AM
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Labor is taxed in the state of Washington.
 
  #9  
Old 04-24-08, 07:11 AM
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You might be able to back into the materials cost by telling him you might have access to some great flooring and asking if he would be willing to install that for you. Tell him you found some cocobolo, he probably can't find that easily!

What you may find though is that the labor only quote will come in such that it doesn't provide a huge cost advantage. I found that supplying the materials may only result in a $400-$800 cost savings given the labor quote with all materials and shipping and depending on species. For me, that wasn't enough of a benefit to offset the hassle of getting the flooring myself.

I would say there is a high probability that you could find the flooring cheaper, given the internet sales channel. But don't forget ALL the materials: flooring, underlayments, possible subfloor repair/leveling materials, nails or staples, adhesives, transitions, shims, contractor paper, trash bags, wood fillers, finish (can run $100/gallon) and perhaps more. Then you have to take delivery or haul and assume the risks of acceptable quality flooring and having adequate extra for culls and waste. Your perception of potential costs savings can disappear quickly will all the above. Because of all that is involved, it is reasonable for the contractor to mark up materials costs.

One potential cost savings area is the amount of extra flooring he orders. Some contractors may go with 5-8% extra. On our job, we went with 20% extra so we could cherry pick the best pieces and longest planks (engineered). We probably could have saved a couple hundred bucks had we just thought, "whatever we get, we get." Hope some of this helps.
 
  #10  
Old 04-25-08, 09:11 PM
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If an installed product is purchased, tax is charged for the labor. If all that is being sold is labor, tax may or may not be charged, depending on your state. Sales tax is a state by state thing.

I do it several ways. I even get a deposit, if all I'm doing is providing labor. I'm not placing you in my schedule unless I have a signed contract and a security deposit. This keeps the serious, serious. A whole in my schedule because the client has no stake yet, does not feed my family, or pay my bills.

10% down to secure a spot in my schedule, 50% when materials are all delivered for acclimation, and 40%+ any additional Time & Material charges, not specified in the contract, upon completion. Change orders are paid in full at the time of the signing of the change order.

I'm not financing any part of a project for anyone. The days of small town trust, have been long gone. A price and a handshake, no longer work in todays society, unfortunately. Too many contractors have been stood up on any payment when they have already spent a lot of money on the jobs. They learn from those bad experiences, and ask for a deposit, and contracts, now.
 
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