The first thing you'll want to do is select the contractors you want to bid on the property, and give them your Contractor Guidelines. You should be doing this even before you've actually purchased the property, primarily because the bidding process could take a few weeks and there's no reason to waste any time. It's also a good way to make sure you can rehab the property and make a profit on it when you sell it. Just keep in mind that legally, the Realtor is suppose to escort the contractors to the properties.

Once the bids are in you may find a great deal of difference in the bid amounts from contractor to contractor. You can get 10 bids on the same job and they may vary by as much as several thousand. Most importantly though is that you check their itemized bid sheets to see that they are doing all the work that is to be done for that property, and that in the bid a warranty on their work is included. If they've followed the guidelines, then everything should be in order. Just make sure that this is so, so that you really are comparing apples to apples when discussing bids with your contractors. Everything may be laid out quite clearly in the contractor guidelines, but you should still be verbally specific when you meet with the contractors. It is essential to meet with the contractors to discuss specifics for the property (the number of bathrooms, what has to be replaced and what can be refinished, changes in floor plan, etc.).

You also need to be aware of when contractors under-bid on a project. An under-bid is when they turn in a bid that is obviously too low for what it is going to take to finish the project as desired. When this happens, it's usually a good indicator that the contractor is inexperienced. You could take advantage of this situation and let the contractor learn a lesson the hard way or you could ask them to reevaluate their bid. Through experience you'll learn to recognize a situation like this fairly easily.

A good rule of thumb that I use is to multiply the expected material expenses by two. The figure produced by this equation should give the contractor enough room for costs of labor and still turn a profit. In some occasions (such as when a 3000 square foot property will completely need repainting), it may be necessary for the contractor to figure in a greater labor cost.

When requesting a bid from a contractor, the bid should always be in writing. Discuss with the contractor when they will have the bid submitted to you and how you will receive it: email, fax, or in person. Throughout the bid process, refer back to the contractor guidelines as much as possible to enforce how serious you are about having these guidelines followed.

In my opinion it is absolutely worth your time and money to obtain all your bids prior to your purchase of the property. There will be cases when you might have a quick closing on a really hot deal and just won't have the time to complete this, but that should be the exception and not the rule. On other occasions you may not be able to get access to the property before closing, for some reason or another. In those situations, just play it as smart as you can.

When initiating the bid process, be sure that you are actually getting a bid from someone that is capable and has the know-how to complete the project. I have had plumbers give me bids on projects for roofing and siding properties. I have had electricians give me estimates on putting walls up. Don't waste your time with pointless bids from shady handymen. You should have already checked their references and work prior to asking for the bid, thereby side-stepping this whole type of situation.