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A few months ago, I had to replace my roof. Some of the estimates I got went as high as $16,500. But by continuing to get estimates based on my “high-low outlier” approach, I was able to get an excellent job done — with the same materials — for $8000. Getting these estimates saved me up to $8500.
Getting estimates ALWAYS saves me money. It is critical to the wellbeing of my stash to invest time in getting estimates for major projects. Here is more.
Replacing my roof. Paving my long, long driveway. Installing my whole-house backup generator. Every one of these and many other major home and auto projects could have cost me umpteen thousands more dollars than they did. But they did not — thanks to my disciplined insistence on getting competing estimates until I find what I call the “low cost outlier” provider.
A case in point is my recent roof replacement. I had to do it or my home insurance company was going to cancel my policy. But even under that kind of pressure, I kept getting estimate after estimate until I knew I had found that low cost outlier. And doing that saved me — at the very least — $2500 (and maybe as much as $8500)!
I only sought estimates from “name brand” national home improvement companies and from more local outfits with stellar records on Angie’s List. The job quotes were all based on the same brand and type of roof shingle and the same installation process. An apples to apples comparison. And yet the estimates that came in were thousands of dollars apart.
The first 2 estimates were fairly close to each other: $10,500 and $11,300. Then the roofing company with the best record on Angie’s List came in at $8000. That looked good. But how would I know that estimate was the low cost outlier deal to take? Answer: I had to keep getting estimates until I found the high cost outlier and could establish the price point around which average quotes clustered.
Sure enough, the next 2 estimates were higher by huge margins: $13,700 and an outrageous $16,500. So there was the high cost outlier answer, and a complete cost-range picture. I signed the $8000 proposal. And saved anywhere from $2500 to $8500, depending on which other quote you look at.
Some of you may be thinking about now: “Well, yeah… Duh!… Of course you get estimates for big jobs like that.” I had the same thought and because of it almost did not write this post. But then I asked myself: if everyone gets estimates like I do, how are the high outlier cost companies staying in business? Some people — maybe lots of people — must be buying those $13,700 and $16,500 roofs because they assume all companies will charge about the same and therefore just sign a deal with the first outfit they call. So I am writing this post to make it ABSOLUTELY CLEAR that there’s a better way that will save you huge amounts of money.
Like when I decided I would not live one more winter season with a 300-foot-long gravel driveway. The 5 estimates I got for asphalting the driveway ranged from $5200 to $12,000. My $5200 paved driveway worked just fine for years until I sold the house.
Like when I needed to get 3 huge trees trimmed and cut away from my house. The 4 estimates I got ranged from $950 to $2400. The arborist-led company with the $950 estimate got the job done right and with no problems.
(And so you can see just how unbelievably outrageous the difference in estimates can be, here is one more real-life example from my personal experience.)
Like when I bought a whole-house Generac back-up generator and needed it and its breaker panel installed. Every company I contacted for an estimate was specifically “approved” by the Generac people to install and work on their generators. Every company was going to have to “pull a permit” from the County and have its finished work pass a County inspection. Again, apples to apples. But my low cost and high cost outliers were worlds apart. Like $500 versus $5000. A ten-fold difference! My $500 installation job was done on time and passed inspection with flying colors. But some poor fool out there somewhere paid five thousand dollars for his installation.
The takeaway: It is great to be frugal on day-to-day expenses and I am. But it is critical to the wellbeing of your stash to invest your time in getting estimates for major projects until you find that low cost outlier that will still do a quality job. Those companies are out there and they can save you thousands!
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Good points on the estimates. I’ve heard “get at least 3 estimates” as a winning strategy to obtaining a low bid. We’re probably going to replace our roof and all the siding this fall, so I’ll consider this approach for sure!
Hi, Justin!
I learned about the 3-estimate rule in business. Couldn’t get a requisition approved unless. In my personal life, I ended up extending the concept once I recognized that there would be such things as “low cost outliers” out there if one looked for them.
Good luck with your roof.
Same here, I needed to replace the HVAC unit in my house. Sears quoted 12K with 1K discount if I signed right away. The local guy replace the system with a 10 year warranty for about 1/2. Same story with the siding and windows. The bathroom remodel was another story. I learned to not trust contractors.
I know this post is old, but I know someone who does these sorts of projects and is the high cost outlier in this area. He knows he costs about twice more than anybody else. There are enough people that don’t call around to get quotes that he has enough business to stay profitable. He makes more than the other guys but works much less. And some people who do call around hire him specifically because he costs the most. Some people assume the $16,500 roof job is going to be twice as good as the $8,000 roof job.
Go figure! The way some people approach these matters makes no sense to me.