Getting three bids is standard advice. Understanding what's in them is where most homeowners miss out. Comparing the bottom line and picking the middle number is a start — but a bid is a document, and what it says (or doesn't say) tells you far more than the price.
What a Professional Bid Should Include
A written bid — not a verbal estimate, not a ballpark — should contain all of the following:
- Scope of work: A detailed description of exactly what will be done, and what won't
- Materials list: Specific products, brands, and quantities where relevant
- Labor breakdown: The portion of the cost attributable to labor vs. materials
- Timeline: Start date, end date, and key milestones
- Payment schedule: When each payment is due and what triggers it
- Exclusions: A list of what is explicitly not included
- Contractor's license number and insurance carrier
A bid that's missing most of these isn't a bid — it's a guess with a number on it.
Materials vs. Labor: Why the Split Matters
Knowing how a bid breaks down between materials and labor gives you real information. If materials are vague ("tile and grout as needed"), ask for specifics before signing — material quality can vary enormously and affect both cost and durability. A contractor willing to specify materials is a contractor who has actually planned the job.
The Payment Schedule Is Part of the Bid
How a contractor structures payments reveals a great deal about their business. Milestone-based payments — tied to completed, verifiable stages of work — protect you. Equal weekly payments regardless of progress do not. California caps down payments at 10% or $1,000, whichever is less. If a bid includes a large upfront deposit, that's a red flag and a potential violation of state law.
Comparing Bids Apples to Apples
Before comparing prices, verify that each bid covers the same scope of work. The cheapest bid may simply have excluded something the others included — demolition, permits, surface preparation, finishing, or cleanup. Create a checklist of everything your project requires and confirm each proposal addresses it.
Why the Lowest Bid Is Often the Most Expensive Project
A significantly low bid is frequently a warning sign, not a bargain. Common reasons a bid comes in far below others:
- Contractor plans to use cheaper materials than specified
- Labor is unlicensed or underqualified, increasing error risk
- Scope is incomplete — missing items will come back as change orders
- Contractor is underestimating and will ask for more money mid-project
When two bids are within 10–15% of each other and a third is dramatically lower, ask the low bidder to walk through their numbers line by line. Their answer — or their reluctance to answer — will tell you what you need to know.
Change Orders: The Real Budget Risk
Even a well-written bid can be undercut by change orders — additions to the original scope that arise during the project. A professional contractor documents every change in writing, with a price agreed upon before work proceeds. Ask each bidder directly: "How do you handle changes to the scope?" A clear, confident answer is a good sign. Vagueness is not.
How to Choose Between Three Bids
Don't default to the middle price. Evaluate each proposal on the completeness of the written document, the clarity of materials and timeline, the contractor's license status and references, and the quality of communication during the bidding process. The contractor who provided the most detailed, transparent proposal is often the safest choice — and frequently not the most expensive one.