Three Contractor Bids, Three Different Numbers: How to Level Rehab Bids Line by Line Before You Lock In Your Budget

Why Your Three Rehab Bids Are Not Measuring the Same Job

You walk three contractors through the same house and get back three numbers that are thousands of dollars apart. The instinct is to assume someone is padding the price. Usually, though, each contractor priced a different job, because each one built his own scope from a quick walkthrough. Bid leveling fixes this. You write one scope of work, line by line, and line up every bid against it so you compare equal work.

The first two reasons bids diverge are scope gaps and low allowances. A scope gap happens when one contractor includes bathroom subfloor replacement and another assumes the subfloor is fine. An allowance is a placeholder dollar amount for items you have not picked yet. A bid with a $3,000 cabinet allowance looks cheaper than one carrying $6,500, but if your ARV depends on the better cabinets, you pay that difference out of pocket.

The third reason is exclusions. Permits, dumpsters, and debris haul-off often sit in the fine print as "by owner" or never get mentioned at all. These line items add up fast. Two dumpster pulls, a building permit, and a day of haul-off labor can easily run $2,000 to $3,000 depending on your county, and none of it shows up in the headline number.

The fourth reason is overhead and profit markup, which commonly runs 10% to 20%. Some contractors show it as a separate line, while others bury it inside every trade. On a $45,000 job, the spread between a 10% and a 20% markup is $4,500. Neither number is wrong, but you cannot compare the bids until you know which one you are looking at.

This is why the lowest bid is often the most expensive once the job is done. Picture a $40,000 bid that excludes $2,500 in permits and dumpsters, runs $3,500 short on allowances, and generates $4,000 in change orders mid-project. Your real cost is $50,000, which is more than a complete $47,000 bid would have cost you. Level the bids first, and the real low price usually turns out to be a different contractor.

Worked Example: Leveling $38K, $52K, and $61K Bids on a 1,400 Sq Ft 3/2

Picture a 1,400 sq ft three-bed, two-bath ranch with a dated kitchen, worn carpet, and a 100-amp panel. Three contractors walk it and bid $38,000, $52,000, and $61,000. That $23,000 spread looks like a pricing problem, but it is mostly a scope problem. The fix is a leveling grid with one row per trade, one column per bidder, and an adjustment wherever a bid leaves something out or prices it unrealistically.

Bid A looks like the winner until you read the exclusions and allowances. It skips three costs you will pay anyway and lowballs two allowances that will come back as change orders:

• Permits, excluded: +$2,500
• Dumpster and haul-off, excluded: +$1,800
• Electrical panel upgrade, excluded: +$3,200
• Flooring at $3/sq ft vs. a realistic $5/sq ft on 1,000 sq ft ($2 x 1,000): +$2,000
• Kitchen allowance of $4,000 vs. a realistic $9,000: +$5,000

The math: $38,000 + $2,500 + $1,800 + $3,200 + $2,000 + $5,000 = $52,500. The "cheap" bid just grew by $14,500, about 38% over its headline. You would have discovered every dollar of that mid-project, when your leverage is gone.

Bid B at $52,000 is cleaner. It covers permits, haul-off, the panel, and realistic finish allowances, but it omits appliances. A basic package runs about $1,500, so $52,000 + $1,500 = $53,500. Bid C goes the other way, including $4,000 of exterior paint that was never in your scope. Remove it: $61,000 - $4,000 = $57,000.

Now compare the leveled totals of $52,500, $53,500, and $57,000. The spread shrank from $23,000 to $4,500, and the lowest bid sits just $1,000 under the middle one. You are no longer choosing between a bargain and a rip-off. You are choosing among three contractors pricing the same job within roughly 9% of each other, so schedule, references, and payment terms now carry more weight than the headline number.

Worked Example: What the Leveled Number Does to Your MAO

Take the same 1,400 sq ft 3/2 with an ARV of $260,000. Using the 70% rule, your starting point is $260,000 x 0.70 = $182,000. From there you subtract repairs, and that subtraction is where the bid you choose changes everything. The formula is simple, but it is only as honest as the repair number you feed it.

Plug in the raw low bid and you get $182,000 - $38,000 = $144,000. Plug in the leveled low bid, after adding back the missing scope, and you get $182,000 - $52,500 = $129,500. That is a $14,500 gap in what you can safely offer. If you anchored on the $38,000 bid, you would walk into negotiations willing to pay $14,500 more than the deal can support.

Here is what that does to your profit. Assume roughly $30,000 in combined buying, holding, and selling costs. At a $129,500 purchase, your profit is $260,000 - $129,500 - $52,500 - $30,000 = $48,000. At a $144,000 purchase with the same real rehab cost, it drops to $33,500. You just gave away about 30% of your margin, and that is before a single change order or surprise.

The fix is to have your own repair baseline before the bids arrive. A trade-by-trade estimate priced for the property's county gives you an independent number for roofing, plumbing, electrical, flooring, and paint. When a bid comes in $9,000 under your baseline on plumbing, you know to ask what was left out instead of celebrating. FlipSmrt produces this kind of line-item rehab estimate from an address, alongside the ARV and MAO, so you can set your offer ceiling before you schedule a single walkthrough.

Use your baseline in three ways. First, cap your offer using the baseline or the leveled bid, whichever is higher. Second, flag any trade where a bid deviates by more than 15% from your number and request clarification. Third, revisit your MAO once the bids are leveled, so the offer you send reflects the real job.

The Tricky Parts: Allowances, Unit Pricing, Change-Order Terms, and Draw Schedules

An allowance is not a price. It is a placeholder. A bid that reads "kitchen tile: $1,500 allowance" means you pay the difference if the tile you choose costs $2,800 installed, so that line just grew by $1,300. Low bidders often look cheap because they guessed low on allowances. Fix this by setting every allowance yourself in the scope (for example, $3 per square foot for flooring material) so each contractor prices labor and markup against the same baseline.

Hidden conditions like rotted subfloor or water-damaged drywall can't be honestly priced as a lump sum before demo. Ask every bidder for a unit price with a fixed included quantity, such as "zero sheets of subfloor included, price per additional sheet." Say Bidder A quotes $95 per sheet and Bidder B quotes $70. If demo uncovers 10 bad sheets, A adds $950 and B adds $700, a $250 gap the lump-sum totals would never show you.

Read the change-order clause before you read the total. "Cost plus 25%" versus "cost plus 10%" on $6,000 of mid-job surprises is $1,500 versus $600 in markup alone. Write a fixed change-order markup into your scope and require written approval before any extra work starts. Do the same for permits: state who pulls them, who pays the fees, and who schedules inspections, because a bid that excludes permits is pricing a smaller job.

Draw schedules can hide risk even when the price is fair. A contract asking for 40% at signing on a $50,000 job puts $20,000 in the contractor's hands before a single wall comes down. If the work stalls, you are chasing your own money while holding costs pile up. Tie draws to completed, inspectable milestones instead of calendar dates.

• 10% deposit at signing
• Draws released after rough-in inspections pass and after drywall is complete
• 10% retainage held until the final punch list is signed off

Put all of these terms into one written scope and send the identical document to every bidder. When allowances, unit prices, markup, permits, and draws are fixed, the only things left to compare are labor, materials, and the contractor's track record.

Bid Comparison Mistakes That Blow Up New Investors' Budgets

Most blown rehab budgets don't start on demo day. They start at the kitchen table when an investor picks a bid. The first and most common mistake is comparing bottom-line totals only. A $38,000 bid that quietly skips the roof and electrical panel is not cheaper than a $52,000 bid that includes both. The fix: build a sheet with one row per trade and force every bid into the same rows before you let yourself look at the totals.

The second mistake is letting each contractor write their own scope. One bidder prices a cosmetic refresh, another prices a gut, and you end up comparing two different houses. The fix is to write the scope yourself, room by room, with finish levels spelled out (for example, "LVP flooring, 1,100 sq ft, mid-grade, including baseboards"). Hand the identical document to every bidder.

Third, investors accept vague line items like "kitchen remodel - $12,000". That number could mean new cabinets and quartz, or it could mean paint, hardware, and a used range. The fix: require a breakdown into cabinets, countertops, appliances, plumbing, electrical, and labor. Send back any lump sum over roughly $2,000 and ask for detail before you compare it.

Fourth and fifth, investors ignore what is excluded and skip a shared walkthrough. Exclusions such as permits, dumpster fees, or haul-off can add thousands, so read that section first and price each exclusion into the competing bids. Then schedule one walkthrough where every bidder sees the same conditions, with the attic, crawlspace, and electrical panel open. That way nobody is guessing at problems the others saw.

The sixth mistake is dropping contingency because a bid "looks complete". No bid accounts for rot behind a shower wall or a failed sewer line you won't find until you open things up. The fix: keep 10% to 15% on top of the leveled number no matter how thorough the bid seems. On a $48,000 leveled budget, that means carrying $4,800 to $7,200 in reserve and running your numbers with it included.

Bid Leveling FAQ

How many bids should I get, and should I share the numbers? Three is the working minimum, because two bids give you a disagreement with no tiebreaker. Past four, you spend more time walking contractors through the house than you save. Do not tell bidders the other totals. Share scope gaps instead. Asking "Another bidder included a new subpanel. Does your price cover that?" keeps everyone pricing the same job without anchoring them to a number.

Is the middle bid usually the right one? Not by default. After leveling, the low bid often climbs once you add the missing items, and the high bid may drop when you strip out upgrades you never asked for. On a $38K, $52K, and $61K spread, the leveled figures could easily land at $49K, $50K, and $56K. Choose based on the leveled number, references, and schedule, not where a bid sat in the original lineup.

What if one bidder refuses to itemize? Ask once, in writing, for at least trade-level totals: demo, roofing, electrical, plumbing, and finishes. If they still send a single lump sum, drop them from the comparison. A contractor who won't break out costs before the job starts will be just as vague when change orders show up.

How much contingency should I still carry? Leveling narrows scope risk, but it does not reveal what's behind the drywall. Carry 10% on a cosmetic rehab and 15-20% on older homes or jobs that touch structure, roof, or foundation. On a $50K leveled budget, that means holding back $5,000 to $10,000 and baking it into your MAO. Do not treat it as found money.

When can I trust a baseline estimate before any bids? Use it for screening, not for signing a contract. A line-item estimate by trade, priced for the county, tells you whether a deal deserves a walkthrough at all. FlipSmrt produces that baseline from an address in under 5 minutes, so you can kill weak deals early and bring a scope checklist to contractor meetings for the ones that survive. Once real bids arrive, the leveled bid replaces the estimate.