Whether you are planning on building a new home or you are looking to remodel, it is best to be prepared and adequately equipped with the right knowledge when approaching a contractor.

Having the know-how of construction lingo will prevent any company from overcharging you and ensures that both parties avoid any communication issues. Below we discuss the difference between a quote vs estimate, bids, proposals, and other language used when negotiating with contractors.

Quote Vs Estimate

A quote is a legally binding fixed price for a fixed amount of work, while an estimate is a projected guess of the total cost of completing a specified project. An estimate is not legally binding and can be adjusted due to a change of services or price fluctuations of materials.

What Is A Quote?

Once an individual has finalized their construction plans, they will submit these plans to contractors so that they can be provided with a written quote. A contractor’s quote is a document that lists in detail the expected costs of the construction project. It includes prices of the materials that will be bought, the description of the products, the shipment costs, and the delivery time.

A detailed quote is discussed before any work begins and it is often renewed after one month since there are fluctuations in the market cost of the materials. It is ideal to finalize a quote within that specified time frame to avoid going over budget and sourcing available products.

What Is An Estimate?

A construction estimate is a rough calculation or educated guess of how much it will cost for the contractor to complete a project. This calculation of the costs involved will include the quote of raw materials, service costs, labor costs, equipment costs, and taxes.

A written estimate is a document that will also include subcontractor work and is also presented during the bidding, proposal, or contract. A contractor might design an estimate that allows payments to be made according to a specific timeline. For example, you might not have to pay upfront but will be expected to make a portion of the cost every fifteen days.

Usually, estimates are provided for free by contractors but some may charge a service fee depending on the depth of the project.

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what should a contractors estimate include

What Should A Contractors Estimate Include?

An estimate will be the basis set for a future contract which is why it should be detailed and elaborate, covering every aspect of the project. An estimate is not binding from a legal standpoint. An estimate should include the following information;

  • Job Description: This should include all the details of the project. Whether it is a renovation or new construction, it should state the area being worked on, the type of work, the timeline, and the project completion date.
  • Materials And Labor Cost: This should include raw materials, shipment costs, delivery time, and total labor expenses.
  • Total Cost: Total cost of the entire project including information about the payment schedule, terms, and late payment penalties.
  • Company Information: Lastly, the document should include information regarding the company or contractors, such as their contact information and project manager. This will make it easier for customers to contact the right person in emergencies.

What Is A Bid?

The concept of bidding is often related to auctions and business proposals. In construction, it is also used in a similar context. Once a homeowner has been quoted for materials and has a rough idea of the estimated costs of the project, contractors who meet the requirements will be able to submit a bid.

A bid is an offer sent by the contractor or construction company to solicit your home construction project. A contractor can also collect bids from subcontractors to complete certain sections of work within one project. For example, one subcontractor may handle window installation while another just focuses on the electrical work.

The bid document may include the following:

  • All the services that will be provided
  • The exact price or final cost for the specified amount of work
  • The time it will take to complete the project
  • Details about the project scope(designs or plans)

Through a bid, many of the most critical discussions are held and finalized between the homeowner, contractor, or subcontractors. This is to provide a thorough understanding on both sides so that client expectations are met and finalized to smooth the construction process.

What Is A Proposal?

A proposal is quite similar to a bid. It is a document submitted to ensure that you are chosen to be hired among other bidding contractors.

A proposal document includes the quotes for raw materials used, costs of subcontractors, labor costs, taxes, and overhead costs. Most importantly it states a fixed price that breaks down the full costs of the project and services provided over a specific timeline.

All this information is stored in one document, so any presumed question that the client may have has already been answered. Many proposals also include a place for clients to sign so that the proposal is accepted and used as a legally binding contract for the project to begin.

How To Respond To A Contractor’s Quote?

Receiving a contract can be thrilling knowing that someone is willing to invest their time and energy into your dream home. However, it is crucial to overlook that excitement and logically understand what the quote states.

  1. Review The Details: You should read through the fine print after receiving a quote. Some details might fall outside your budget or your conditions, so it is essential to read the contract thoroughly. Seek a second pair of skilled eyes to look it over if you have any doubts.
  2. Ask Questions: If you need clarification about any of the conditions written in the contract, feel free to ask questions. Question every quote detail so you can include conditions accordingly and ensure you are not being charged for more than necessary.
  3. Negotiate Or Make Changes: The first price is not the last. There may be room to negotiate to bring the cost down to your budget. Feel free to question the costs and use your negotiation skills, only if you’ve done your research on market pricing. Understand that the contractor designs the contract, and they are likely to consider their projected scope of work. Hence, if any adjustments can be made, whether to decrease the costs or to add on more services, they are done timely to ensure a smooth procedure.
  4. Research Your Contractor: Observe the contractor’s behavior and communication while finalizing the contract. Looking at reviews from YELP and Google Business Profiles can give you an idea of if they are trustworthy, reliable, and provide quality work. In the long run, these qualities will help ease the construction process.
  5. Make Your Choice: Do not hesitate to say no to a contractor that doesn’t fit your requirements. While some contractors may offer great pricing, they may not be the best at their work. Hence, rely on your research and politely decline anyone that doesn’t fit your needs.

how to negotiate with contractors 

How To Negotiate With Contractors

Most contracts provide little room for negotiations, but there can be acceptions to the rule in asking for help in trimming costs. Be sure to set the right tone and be upfront about your budget beforehand to avoid this situation.

A professional contractor will communicate clearly if they can work within your budget. It is ideal to research previous client testimonials of your chosen contractor and look at their website to view past projects or galleries of their work.

Receiving multiple bids will help you set a general price range and you will be able to negotiate according to market pricing. Once finalized, ensure that every cost and price change is written in the contract.


These terms above need to be explained to homeowners to match client expectations. Whether receiving a quote, estimate, proposal, or bid, making sure both sides understand the underlying conditions before agreeing upon a project ensures a smoother construction process.


Can A Contractor Change The Price?

A written “Change Order” must be written and signed by both the homeowner client and contractor in order for a contractor to change the price in California. This order must also be put in place prior to the change.

Is A Contractor Quote A Contract?

Legally, no. A quote only states the costs of the raw materials, shipments, and services. It is not a document that states all the details of the project or the additional charges that will be included in the project. Hence, a contractor quote is not a binding contract but a document to help the client understand the general project costs.

Is a Contractor Quote Free?

Yes, most contractors offer free quotes to clients so they can get a general idea of the kind of budget they should have. However, in some cases where the contractors have acquired specific degrees or certifications, they might charge a fee for their detailed estimates of raw materials.

How Many Contractor Quotes Should I Get?

It is ideal for getting at least three quotes from three different contractors. By having multiple quotes, you will be able to understand the market pricing and will be able to negotiate with the contractor of your choice. It will also help you set an appropriate project budget and protect you from overcharging contractors.