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Old 10-30-2018, 06:45 AM   #1
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Default Lock in the sale

Any methods for securing verbal estimate approvals ? Deposit ?

I have estimate approvals for somewhat bigger jobs pushing out to January and February. They are just verbal.

“Estimate is approved , we would like to proceed”

The job being 2-3 months away from starting should I ask for deposit?

Just wondering what methods you use to lock in proposals or just to keep customers less likely to continue to shop around.


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Old 10-30-2018, 06:47 AM   #2
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Originally Posted by WronGun View Post
Any methods for securing verbal estimate approvals ? Deposit ?

I have estimate approvals for somewhat bigger jobs pushing out to January and February. They are just verbal.

“Estimate is approved , we would like to proceed”

The job being 2-3 months away from starting should I ask for deposit?

Just wondering what methods you use to lock in proposals or just to keep customers less likely to continue to shop around.
A signed contract and deposit, which the signed contract stipulates is non-refundable.
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Old 10-30-2018, 07:29 AM   #3
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Usually it's not that big of a deal to get someone to sign a contract for some small job, just hand it to them when you get there to start.

That said I do lots of small and even medium sized jobs on verbal approvals for commercial and industrial customers that I know and trust. It's still how things are done, around here at least. Knowing who to trust is important.

In between a signed contract and a verbal approval, you can accept their purchase orders. They issue a purchase order for the work, reference your estimate and the payment schedule on the purchase order. (The payment schedule might be as simple as "50% upon acceptance by customer in advance, balance due immediately upon completion.")

If more confidence is necessary, have them cut and paste the verbage from the estimate to the purchase order. If they're really on the ball, they'll do that without you asking.

If they say "what's a purchase order?" don't accept their purchase orders, get a signed contract
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Old 10-30-2018, 07:31 AM   #4
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To insure a timely start to your project by scheduling and locking in a date, we'll require a signed contract and non-refundable good earnest deposit of 10% which will be credited to the initial start deposit.

On the start date, we'll require another $XXXx for materials and equipment.

If applicable: Please read and sign that you are in receipt of the "Three Day Right To Recind" document.
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Old 10-30-2018, 07:47 AM   #5
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To insure a timely start to your project by scheduling and locking in a date, we'll require a signed contract and non-refundable good earnest deposit of 10% which will be credited to the initial start deposit.

On the start date, we'll require another $XXXx for materials and equipment.

If applicable: Please read and sign that you are in receipt of the "Three Day Right To Recind" document.
Out of curiosity, why 10% and not the full 50%?
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Old 10-30-2018, 07:51 AM   #6
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Out of curiosity, why 10% and not the full 50%?
No reason really, what ever amount you can get. Frankly, 50% is what we require.
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Old 10-30-2018, 07:57 AM   #7
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It's not the kind of work we do, but some contractors are working for GC's or primes on larger multi-day or week projects that have progression payments and in those cases the 10% is probably all that'll work with that customer.
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Old 10-30-2018, 07:57 AM   #8
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If you have a confirmed start date, take the deposit. I have three TI's that have been delayed by three months and counting. I told them they now go to the back of the line. When I get a green light, I'll take their money.
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Old 10-30-2018, 08:03 AM   #9
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If you have a confirmed start date, take the deposit. I have three TI's that have been delayed by three months and counting. I told them they now go to the back of the line. When I get a green light, I'll take their money.
Why not take their money now? What's a TI?
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Old 10-30-2018, 08:26 AM   #10
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TI = Tenant Improvement.

It's common construction slang out West.

The landlord builds a 'shell' -- that is -- a bare bones structure.

Then a certain amount of $$$$$ is provided to a tenant that signs a multi-year lease. Anything beyond that amount -- which is typically required -- is at the tenant's sole expense.

Both expenditures -- as improved real estate -- become the property of the landlord at the end of the lease.

Such 'shells' will include Poco Service and minimal bathrooms... and perhaps a single partition wall between the entry 'lobby' and the rest of the warehouse// space.

Not uncommonly, even the shell bathroom is demo'd straight off -- it's too tiny.

This scheme is typical for spaces dedicated to a single tenant.

A similar logic holds for strip malls, etc. These will omit even sham bathrooms.

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Old 10-30-2018, 10:59 AM   #11
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Quote:
Originally Posted by WronGun View Post
Any methods for securing verbal estimate approvals ? Deposit ?

I have estimate approvals for somewhat bigger jobs pushing out to January and February. They are just verbal.

“Estimate is approved , we would like to proceed”

The job being 2-3 months away from starting should I ask for deposit?

Just wondering what methods you use to lock in proposals or just to keep customers less likely to continue to shop around.


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Quote:
Originally Posted by HackWork View Post
A signed contract and deposit, which the signed contract stipulates is non-refundable.
To expand on what @HackWork suggested...
1. A signed contract.
2. A non-refundable deposit large enough to ensure that all of your costs are covered if the client bails at the last minute in 3 months.

Your costs should include:
1. Some profit.
2. Time spent preparing quote.
3. Time spent scheduling project.
4. Time and labor spent ordering, receiving, and storing materials.
5. Time, labor, and restocking fees for any material purchased in the event client backs out.
6. Some more profit just in case the client backs out at the last minute.

Your numbers and the specifics of the job will determine the size of the deposit required. If the client likes your quote then there is no reason not to ensure that you make money however it unfolds.
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Old 10-31-2018, 11:15 PM   #12
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On smaller projects, signature and whatever upfront is listed on the estimates.
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Old 11-01-2018, 06:16 AM   #13
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Quote:
Originally Posted by WronGun View Post
Any methods for securing verbal estimate approvals ? Deposit ?

I have estimate approvals for somewhat bigger jobs pushing out to January and February. They are just verbal.

“Estimate is approved , we would like to proceed”

The job being 2-3 months away from starting should I ask for deposit?

Just wondering what methods you use to lock in proposals or just to keep customers less likely to continue to shop around.


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One of the biggest jobs we had was secured using only a PO and a schedule of values we billed against.
All was well as it was somewhat of a government job.

I worked for a service based contractor and they required their guys to have a customer sign a document allowing them to work on the property.
This was written on the back of the work order. It was paragraphs written by an attorney.
When the job was complete, they signed the front agreeing they were satisfied and the employee collected the money.

I have most of my customers give me a verbal approval or at least an email or text to approve a written or verbal estimate.

If it's a new customer, I provide a written proposal they sign and return with a deposit. The deposit I ask for is usually the price of equipment and the net profit I calculated for the job.
Homey don't work for free.
I will then send a permit runner to get signatures and apply for a permit. If we need engineering, I'll ask them for the engineers fee as a line item.
I will usually ask for the permit fee, the permit runners fee and the engineering up front to cover my out of pocket expenses.

If I have a feeling that the installation might not pass plan review due to some flag I recognize, I hold off on buying and gear or equipment until the plans are approved.

This has been my formula since about 1994.

I want to remind anyone in this business to find a construction attorney and give them a retainer for advice.
Our attorney is excellent and works out of a $2,000 retainer that we maintain with her.
I've noticed that with a retainer, they sometimes will answer an email question or make a demand for you without charging you. With emphasis on the word "sometimes" even as far as the word rarely.

A construction law attorney sees our problems every day and can for sure furnish you with a contract that works for your state. It won't be free but, the first customer that has to pay both your attorney, their attorney, court costs and write you a check or defend a lien, will be priceless.
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Old 01-20-2019, 01:57 AM   #14
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What type of work are you doing?
How big is your average job?
Legally speaking, a contract is not binding until money has changed hands.
If you want to secure the contract, then get a deposit.
If the GC doesn't want to do that, I'd be suspicious of his ability to pay me once the work had started.
If you scare some customers away because they didn't want to give you a 20% deposit then consider yourself lucky: its better to find out they don't like paying at the beginning of the job then at the end!
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