Realtors! What are they doing to Us?

Discussion in 'Lawn Mowing' started by machine, Oct 24, 2000.

  1. machine

    machine LawnSite Member
    from OH
    Messages: 101

    I Just recieved a mailer from a Real Estate Agency, I thought I would share it with you guys. Here is the article it is directed to homeowners.

    Hiring Contractors....
    Anytime you think about home improvement, there are a number of details to be considered. There is an element of risk when hiring a contractor to perform work for you. The following are steps you take to protect yourself:

    1) Check references by looking at the contractor's work yourself.

    2) Ask for copies of current worker's compensation and liability insurance policies.

    3) Never put more than 10% down to bind a contract.

    4) Ask for copies of building, plumbing, heating, and electric permits, as required.

    5) For larger jobs, list several stages in the job when payment will be made. Define what percentage of the job each represents and pay only that amount when all work associated with taht stage is successfully completed.

    6) Withhold 10% at each stage, reserving those sums for a final payment. Release these funds only when the job is 100% complete.

    7) If the contractor is of limited financial means, arrange to pay for significant materials(including concrete, roofing, replacement windows, and deck materials) yourself. This relieves the contractor of financial burden and protects you form a lien by the supplier if the contractor does not pay him. Note that your desire to pay for materials yourself could be embarrassing for your contractor. You might stress that you are interested in buying the contractor's trade skills, not purchasing skills.
  2. Scraper

    Scraper LawnSite Bronze Member
    Messages: 1,656

    Honesty...I see nothing anti-LCO in there. Those are actually good points. If the job is done correctly then full payment is made.

    I really like #2 as it will weed out the scrubs and allow the "professional" contractors to get the work they deserve!!!
  3. machine

    machine LawnSite Member
    from OH
    Messages: 101

    Now for my rebutal:

    As a contractor, I have no problem with 1, 2, 4 and 5.

    As for 3, I will set the percentage for any down payment not the client. That will start us off on the wrong foot.

    As for 6, whithholding any money from us during stages of the contract will delay progress or stop it entirely. That is enough for me to quit, because I forsee problems of getting payed the full amount.

    And for 7, Any homeowner that is going buy the matieral for you and not going to consult you about your preferences for products is stupid. As a contractor we have better access and more knowelege of commerial products we like to use. When a homeowner buys materials he pays more money for lower quality products. My name is on that project and I will not use inferior materials. I want the job done right.

    That is why I do not work for Realtors, they have money one day but no money on the other days.

    I hope my cleints dont take this mailer seriously, because I will tell them to go to hell, I have more hassel free work than they realize. A word to the wise, take care of your contractor, and he will do the same. Easy going on the work site, is much appreacited, so I will go the extra mile.
  4. Scraper

    Scraper LawnSite Bronze Member
    Messages: 1,656

    Machine: What real estate agency sent this? Was it a big one like Prudential or Century 21? Just wondering if I might expect to see something similar out this way.

    P.S. Your rebuttal points make sense, but I see 10% as really not that much and if you are not of "limited financial means" then there isn't a problem with #7. And actually I believe this is more directed towards construction/home improvement contractors as opposed to us.
  5. chrisbolte

    chrisbolte LawnSite Member
    Messages: 135

    The are trying to protect the homeowner from getting screwed. Truthfully if you are upfront with you plans wih a customer you wont have any problems.
  6. Runner

    Runner LawnSite Fanatic
    Messages: 13,492

    I don't think this applies to us as much, because our customers see exactly what they are getting, nothing to hide. This is opposed to roofers, plumbers, electricians, and especially all those "handyman guys" that like to target older people, ESPECIALLY with "roof repair." I've heard stories that just infuriated me. We had a guy from Dtroit running around here putting black paint mixed with oil on driveways, and charging 6 to 7 hundred dollars for it. A normal SEAL job only goes for about 150 bucks around here.
  7. machine

    machine LawnSite Member
    from OH
    Messages: 101

    Scraper, Did You get the name by scraping sheet metal. The mailer was from Sibcy Cline.
    As far as, requiring a down payment. Why not, the clients I deal with are more than willing to give me money to start, so I have always required a down payment ussually 20%-30% to cover material cost.

    One part of business is to manage Cash Flow. So take for example a $35,000 installation not less than a month to complete. I get 10,600(tax included) up front a week or two before I start. $10,600 for phase 2 is due the 2nd week after the start and $15,900 at the completion.

    That down payment of $10,600 is immediately deposited with my broker which he will match 70/30 in margin. So that 10,600 gives me $18,020 worth of buying power to be invested in secruities yeilding 20%-30% monthly.
    That means that down payment is making money while I am working on the job. The purchase of matierals is payed on credit with a 90 day float.

    At the end of the month the job has been completed and I should recieve the $15,900 in a couple of days. but look what happen to the intial down pmt and phase 2 deposit.

    + 18,020(in my account 44 days with a 38% return)= 24868
    + 18,020(in my account 30 days with a 23% return)= 22165
    - Margin expense and commisons 15619

    Total Down payment and one installment recieved = 31414

    I know have $31,414 in my account and I am yet to recieve payment of $15,900 and pay for the matierals.

    90 Days later:

    +53404(31414+magin, 90days @ 62% return) = 86514.48
    +27030(15,900+margin,80days @46% return) = 39463.38
    -Payment for Material ( 75 days 0% ) = 12605.00
    -Payment for labor on project = 6400.00
    -margin expense & commisons = 35240.00

    Total Profit for a $35,000 project = 71732.86

    That is why is so important to get money up front and get paid on time. I hope you see the opportunity cost here.
  8. Mr.Ziffel

    Mr.Ziffel LawnSite Senior Member
    Messages: 291

    Machine, I'd certainly be interested in knowing where you're getting a 62% return on your investment for 90 days. Even a hint would be appreciated. Thanks.
    Will M.
  9. machine

    machine LawnSite Member
    from OH
    Messages: 101

    Will M.
    Stock & Options Strategies is your answer. Few people are aware of the kind of returns that are possible because they are heavy influenced by the media telling them 10-15% per year is great. Contrary to popular beleif, investing short-term is the way this is achieved. Like business, goals are set for each month not how much reveune I will take in a year. It is all about making your money work for you.

    One thing I hate, is some people will tell me that options are risky. They don't know what they are talking about because the use of options with stock can eliminate risk and lock in a guaranteed gain. If you are Interested in making larger returns look into the use of NAKED PUTS.
  10. geogunn

    geogunn LawnSite Gold Member
    from TN
    Messages: 3,010

    realtors use the type of marketing game mentioned in the mailer to gain the confidence of their customer. they portray themselves to be the customers friend which in reality may or not be the case.

    when I do a job it is on written proposal with terms specified and signed by both. it's a binding contract.

    no way am I going to accept a 10% shortage on a partial payment due.

    I had a cat try to starve me out when I was building swiming pools. the cement pond turned pretty green by that july and the frogs had a good time with the skeeters.

    when one party to an agreement welches on the deal, neither parties come out ahead (usually).


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