When you’re looking to hire a contractor, it’s usually for a big job. You’re probably expecting to pay hundreds, if not thousands, of dollars for the work, but you also want to make sure you aren’t paying too much.
Figuring out the real fair market value of a contractor’s services can be tricky. Each job they perform is unique, so they usually don’t just have a basic list of prices you can review. This means you’ll need to do some legwork to figure it out.
If you’re ready to find out the real fair market price of services, here’s how to get started.
Research Contractors Online
There is no shortage of review sites online. Everything from Yelp to Home Advisor to Angie’s List can provide you with a wealth of information.
But why do you want to research contractors when you’re trying to find the fair market price for services? Because this will give you an idea of which contractors are reputable and which aren’t.
Ultimately, if a contractor has scores of bad reviews, you probably don’t want to trust any price they quote. However, those with stellar reputations are more likely to reflect the current fair market price in their quotes. Otherwise, people wouldn’t be so happy with them.
In some cases, you can also see pricing information on these sites. However, you need to keep in mind that every project is different, so your cost is almost guaranteed to vary from someone else’s.
Find out which contractors provide the services you need and work in your area. Then, create a list and get ready for the next step.
Quotes, Quotes, and More Quotes
When you’re trying to figure out what price is fair, getting multiple quotes for the work is the best way to go. Since you already have a list of reputable contractors, it’s time to make some calls or send some messages.
What you want to do is give them an overview of your project and let them know that you want an estimate. In most cases, contractors won’t charge you for a bid, so don’t be afraid to reach out to multiple contractors.
As you walk them through your project, make sure you give every contractor the exact same description and details. If you add an item or leave something out, and the contractors don’t have the same overview, their quotes may differ substantially because of the differences.
If necessary, write out a quick checklist for your project. That way, you can reference it during each meeting, making it easier to remember the details.
Ideally, you want to gather at least three quotes, though five is often better if your project is large or expensive.
Determining the Real Fair Market Price
Once you have the quotes in hand, you can figure out what price is fair by comparing them to each other. Usually, the rates will be fairly similar, as long as they were all working with the same project details. However, if one is dramatically higher or lower, you should automatically be wary.
Just because a contractor quotes a low price doesn’t guarantee you’re getting a great deal on high-quality work. While they may do a fine job, a significantly lower quote could also signal that something is amiss, so don’t jump on it just because it’s cheap.
Similarly, a single price that is much higher than the others doesn’t mean the work will be of superior quality. There are a lot of reasons a contractor might quote a higher than average price, including hoping that you’ll turn them down because they don’t want to take on the project.
If all of the remaining quotes are similar, then you can say with reasonable certainty that the real fair market price falls in that range. So, pick a contractor from the group and schedule the work with confidence.
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Tamila McDonald has worked as a Financial Advisor for the military for past 13 years. She has taught Personal Financial classes on every subject from credit, to life insurance, as well as all other aspects of financial management. Mrs. McDonald is an AFCPE Accredited Financial Counselor and has helped her clients to meet their short-term and long-term financial goals.