Contractor Bids That Get Approved by Lenders
By Infinity Lending ServicesUpdated March 4, 20266 min read
Quick Answer
The key requirement for lender approval is a detailed scope of work with line-item pricing. Vague or lump-sum bids are frequently rejected.
Table of Contents
What Lenders Want to See
Lenders review contractor bids to verify that the rehab budget is realistic and that work will be completed to a standard that supports the projected ARV. A detailed scope of work with line-item pricing is the single most important document in this process.
Elements of an Approvable Bid
Line-Item Pricing
Every task should have its own cost. Break work into specific categories:
- Demolition: $X
- Framing: $X
- Electrical: $X
- Plumbing: $X
- HVAC: $X
- Drywall: $X
- Flooring: $X
- Kitchen: $X
- Bathrooms: $X
- Exterior/Landscaping: $X
- Contingency: $X
Scope of Work Detail
Each line item should describe:
- What work will be performed
- Materials to be used
- Quantity and measurements where applicable
- Labor and material costs separated when possible
Contractor Information
Include with every bid:
- Contractor name and company
- License number
- Insurance certificate
- Contact information
- References from similar projects
Common Reasons Bids Get Rejected
- Too vague: "Kitchen renovation - $15,000" without detail
- Missing line items: Leaving out categories like permits or contingency
- Unrealistic pricing: Costs that are significantly above or below market rates
- No contractor credentials: Missing license or insurance information
- Incomplete scope: Not addressing all necessary repairs identified in the property inspection
Tips for Strong Bids
- Walk the property with your contractor before preparing the bid
- Use a standardized template for consistency
- Include photos of current conditions for each work area
- Reference comparable projects your contractor has completed
- Add a 10-15% contingency line item
Related Reading
Key Takeaways
- ✓Line-item pricing is essential for lender approval
- ✓A detailed scope of work speeds up the approval process
- ✓Multiple bids demonstrate due diligence
- ✓Contractor credentials and references add credibility