You sit down with three contractors about an addition or a major remodel. Two of the estimates come back in roughly the same neighborhood. The third comes in dramatically lower — sometimes tens of thousands of dollars lower. You’re already mentally spending the difference.
Stop. That bid is almost never a gift. In the kind of large-scale work we do across South Jersey and the Main Line, it is almost always a warning, and we’d rather you hear it from us now than learn it three months into a project that’s gone sideways.
What a wildly low bid actually means
A real estimate for a real addition reflects real costs: permits, engineering, framing, electrical, plumbing, HVAC, insulation, finishes, insurance, overhead, and labor that shows up every day. Those numbers don’t vary wildly between honest, established contractors. When one bid is dramatically lower than the rest, something has been left out. The only question is what, and who pays for it later.
Usually it’s one of a few things. The contractor hasn’t accounted for the work that’s actually in your scope and plans to come back later with change orders for items that should have been in the original number. The materials assumed in the bid are a tier or two below what the other bids specified, and you’ll find out at install. The crew isn’t licensed in your township, isn’t insured, or both. Permits aren’t in the number because the contractor doesn’t plan to pull them. Or the low number is a foot in the door, and once demo begins and your house is open to the weather, the price will climb to where it should have been all along — except now you have no leverage to walk away.
Why contractors lowball
Because it works. Homeowners shop on price. A low bid wins the job. Once the contract is signed, the contractor has leverage that you do not — your house is torn up, your family is living around it or out of it, and walking away costs you more than staying. Every change order from that point on is a negotiation you’re going to lose.
There’s a second version that’s almost as common. The contractor genuinely doesn’t know what the job costs. They underestimated, they’ll figure it out mid-project, and the gap will land on you. This is especially common with newer crews that are scaling fast or with handymen taking on work that is structurally and procedurally bigger than what they normally do. The intent isn’t predatory. The outcome is the same.
And a third, quieter version: the contractor isn’t running their business on the books. No insurance, no workers’ comp, no real overhead, no tax obligations — so on paper their costs are lower. You’re not getting a discount. You’re absorbing the risk a legitimate contractor pays to carry.
What it looks like in practice
The homeowner in Haddonfield is comparing three bids for a rear addition. The third bid is the one that catches their eye. They sign. The first invoice after the deposit is for “unforeseen conditions” related to the existing framing — a discovery any contractor walking the job before bidding should have caught. The second is for “upgraded materials” that turn out to be the materials any reasonable contractor would have specified to begin with. By the time the project gets to drywall, the total cost has crept past what the original, honest bid would have been. The work that’s been done is questionable. They call us to come look. Sometimes we can finish it. Often the cleanest path is to tear out what’s there and start over, which is heartbreaking math.
The Moorestown version is similar but slower. The low bid wins. The contractor disappears for weeks at a time. The crew that does show up is different every visit. The homeowner asks for receipts for materials they were told they were paying for at cost — those receipts never materialize. Final payment is demanded before the punch list is walked. By the time the homeowner pushes back, the contractor has stopped answering the phone.
The Main Line version is the most expensive one. A second story addition in Wayne or Villanova is a project where the numbers are big enough that a lowball can be deeply lowball — and the homeowner is sophisticated enough to think they’ve simply found a more efficient operator. They haven’t. They’ve found someone who is going to escalate the price as the framing goes up, and by the time the roof is back on, the project is at or above the original honest bid, with a relationship that has already broken down.
What a legitimate bid actually contains
Before you can spot a bad bid, you need to know what a real one looks like. A serious estimate for a large addition is a line-itemed document. It includes a clear scope of work, allowances for finishes and fixtures and appliances spelled out in writing at realistic numbers, a payment schedule tied to actual project milestones rather than to the calendar, a defined change order process with pricing rules, named subcontractors or at least named trades, who is responsible for pulling and closing permits, what is and isn’t covered by warranty, and a current certificate of insurance from the contractor’s carrier. If a bid is missing two or three of those things and the price is dramatically lower than the alternatives, the missing pieces are not an oversight. They are the reason the number is what it is.
What to do if you see it
Ask the low bidder, in writing, to walk the bid line by line against one of the higher ones. Ask specifically what allowances they’ve put against finishes, fixtures, and appliances, and whether those allowances reflect actual product pricing in our market. Ask who pulls and closes the permits in your township — Haddonfield, Moorestown, Voorhees, Collingswood, Haddon Township, Haddon Heights on the New Jersey side, or Ardmore, Bryn Mawr, Wayne, Villanova, Swarthmore on the Pennsylvania side — and ask to see proof of license and current insurance. Ask whether the price includes engineering, and if not, who pays for it. Ask for three references in your zip code or comparable, with permission to call them. If the answers get vague or the references never come, you have your answer about the bid.
And ask yourself the obvious question: if this contractor really can build the same project for that much less than every other reputable contractor in the market, how are they staying in business? The answer is almost always that they aren’t, for very long — which is its own problem when your project is still under their warranty.
What MAG does instead
Our estimates are line-itemed, our allowances are spelled out in writing at realistic levels for our market, and the number you sign is the number we build to unless you decide to change something. Change orders go through a defined written process before the work happens. You’ll see the same number at the start of the project and the end of the project, with the only adjustments being the ones you authorized in writing. See how we approach home additions, our process for second story additions, or our broader remodeling work. If you’d like to see what completed projects in your area look like, the case studies are a good place to start.
Common questions
Should I always go with the middle bid?
Not automatically. The middle bid is a shortcut, not a strategy. What matters is whether the bid is line-itemed, whether the allowances are realistic, whether the contractor is licensed and insured in your township, and whether the references hold up. Sometimes the lowest bid is the right bid because the contractor has genuine efficiencies. More often it isn’t.
How much variation between bids is normal?
For a real apples-to-apples scope, established contractors in our market usually land within a reasonable range of each other. When one bid is meaningfully outside that range — high or low — the scope is almost always different in a way the bid is hiding. Ask for the line items and compare.
Can I just negotiate the higher bids down to match the low one?
You can ask, and a contractor may sharpen their pencil on a specific line. But a contractor who can build the project responsibly for the lowball number would already be bidding the lowball number. What you’ll usually get instead is a “yes” that quietly drops scope, allowances, or quality to fit — which puts you back in the same trouble the low bid would have caused, just on different paperwork.
What if the low bidder has great reviews?
Read the reviews carefully. Look at how recent they are, whether they cluster in a short window, whether they reference projects similar in size and scope to yours, and whether the reviewer names are the kind of names that look like real people in your area. A wall of five-star reviews from accounts created in the same month, with no project specifics, is its own red flag — and one we’ll cover separately.
Is it ever okay to pay a large deposit upfront on a low bid?
The size of the deposit is its own conversation, but the answer to this specific question is no. A front-loaded deposit on a lowball bid is the highest-risk configuration in the entire industry. If you have any doubts about a contractor, a heavy deposit is what makes those doubts impossible to act on later.