# Reduced Bids



## brisbenea (Jul 22, 2014)

Reputable National (working with for over 3 yrs) informs me that "HUD has reduced your bid". The reduced bid is excessively low. HUD reviewed my appeal (according to the National) and the appeal was denied. National informs me that according to HUD regs, I have to complete at the reduced rate. 

Questions:
Is there a HUD reg that requires subs to complete work when bids are reduced? (I doubt it. It is probably a new rule that the National is trying to implement), but since I am not sure, I have asked the question.

Is there a way to see the appeals process between the National and HUD?

We are still undecided on whether or not to complete this item at the reduced rate. I am undecided because the relationship with this National is very profitable and I don't want to ruin it because of this, however, reduced bids from HUD are becoming increasingly common. Because we have to rely on the National to plead our appeals to HUD, we don't know if the National is really processing the appeal, we don't get to see the results of the appeal directly from HUD, etc. I would prefer not to be in a situation where I have to "trust" or depend on a National to justify my pricing to HUD.

Most contractors dealing with FHA properties have experienced this. How are you dealing with this problem?


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## GTX63 (Apr 12, 2012)

You would not be ruining a relationship with the national. From your description, thru fraud and deception they would be.

HUD doesn't cut bids, nor do they have an appeals process.

Ask to see the "HUD regs" that require you to complete work for someone else's dictated price.

The national is fully aware of how much volume they send you, and they expect this is leverage to force you to bend under their will.

How did I deal with it? We have preprinted letters that we sent via postal service and pdf email informing companies that tried this scheme that altering and or/reducing any letterhead bid from my company would void that quote and we would hold them liable for wire fraud, including the poor little girl in the cubicle sending out such emails. Sometimes the young lady would quickly respond and say she is only doing what she was told. Other times management would contact us. A few ignored us. It all boils down who you are willing to lay down for and for how long. That became a deal breaker for us, no matter how much business we did with someone.


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## brm1109 (Sep 17, 2012)

I have had work orders where the bid was reduced by 20 or 30.00 those we look at and most of the time can live with and it doesn't happen to often. Anything else we reply that no permission was ever given to change our price and therefore the original bid is void.
I had 1 company threaten me with a back charge if we didn't do the work at the reduced bid.
Put in writing about no permission to change the amount and under no business case law would a back charge stand. Gave them to somebody else.


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## GTX63 (Apr 12, 2012)

I should have mentioned that those letters we sent out were ccd to our attorney as well. Helps for them to know you are serious.


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## PPPrincessNOT (Nov 11, 2013)

you lost me at 
"reputable National"



Melody


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## BamaPPC (May 7, 2012)

No one can force you to accept, or perform on, a reduced bid. Period. Anyone that attempts to issue a "charge-back" because of this is opening themselves up to a lawsuit. 

The Consumer Financial Protection Bureau would love to hear about such an occurance.

And any barrister worth his salt would be drooling listening to such shenanigans.


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## BPWY (Apr 12, 2012)

They lied like the proverbial rug to you.

If some one takes such fraud and abuse and continues to work for a company doing this to them, then I'd say they deserve the bid cuts etc. 
Sooner or later the bid cuts will become straight up $0 invoices due to some BS excuse. 
Because they know this "contractor" puts up with their fraudulent actions.


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## newreo (May 30, 2014)

brisbenea said:


> Reputable National (working with for over 3 yrs) informs me that "HUD has reduced your bid". The reduced bid is excessively low. HUD reviewed my appeal (according to the National) and the appeal was denied. National informs me that according to HUD regs, I have to complete at the reduced rate.
> 
> Questions:
> Is there a HUD reg that requires subs to complete work when bids are reduced? (I doubt it. It is probably a new rule that the National is trying to implement), but since I am not sure, I have asked the question.
> ...



HUD can reduce the pricing, we had seen documents from HUD. Further more, we had seen documents from HUD when they didn't think that specific city violations should have been addressed and asked for sign off on the repairs from the city after completing 2 items out of 20. Made me laugh. Not even starting anything unless approval comes the way it should. You are sub, not their employee, you can say no. We said no to many of these when they didn't make sense. If HUD knows better, they can do work themselves. If national can't negotiate, too bad. We are not doing 500.00 exterior doors for the price of 175.00 minus discount. 
We started seeing better approvals recently, but too bad, we left P&P, as we can't deal with this any more. Especially ethic on the regional side. Which one of the nationals is now profitable? Just interested in finding one. Just say no, can't complete, give them breakdown why and ask to reassign the work order. 
Reputable natioanals have multiple vendors they can try to assign it.


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## GTX63 (Apr 12, 2012)

newreo said:


> HUD can reduce the pricing, we had seen documents from HUD. Further more, we had seen documents from HUD when they didn't think that specific city violations should have been addressed and asked for sign off on the repairs from the city after completing 2 items out of 20.


Please post those HUD docs.


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## BPWY (Apr 12, 2012)

GTX63 said:


> Please post those HUD docs.





No kidding, in all my time associated with the industry this is the first time ever of hearing that such docs even exist.


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## newreo (May 30, 2014)

BPWY said:


> No kidding, in all my time associated with the industry this is the first time ever of hearing that such docs even exist.


These documents called over-allowable screening and part of HUD approval processing. You do know that I can't send these documents, but HUD does price on their end and will reject bids that they don't find appropriate. Then it's up to Bank to deal with it or up to national to negotiate. We had seen negotiations go through.


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## GTX63 (Apr 12, 2012)

newreo said:


> These documents called over-allowable screening and part of HUD approval processing. You do know that I can't send these documents, but HUD does price on their end and will reject bids that they don't find appropriate. Then it's up to Bank to deal with it or up to national to negotiate. We had seen negotiations go through.


The last sentence is how it works out. If there is an issue, it is up to the bank or the national to handle it. No matter the phrasing or terminology, HUD does not alter bids nor direct sub contractors to complete work at their pricing. 

FYI- I am free to disclose any part of my companies internal communications as I see fit, including HUD. Any non disclosure I may or may not have signed will be as binding as they consider my letterhead bids to be.


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## BPWY (Apr 12, 2012)

newreo said:


> These documents called over-allowable screening and part of HUD approval processing. You do know that I can't send these documents, but HUD does price on their end and will reject bids that they don't find appropriate. Then it's up to Bank to deal with it or up to national to negotiate. We had seen negotiations go through.




Nobody has said HUD doesn't reject bids. 

The disagreement comes from when the national says that HUD cuts the bids. 
All I've ever heard until your comment about seeing such docs is that HUD either accepts or rejects the bid. 
Yours is the first claim of ever seeing adjustment docs. You can post them, just redact any privacy information and post them.


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## BRADSConst (Oct 2, 2012)

newreo said:


> *but HUD does price on their end and will reject bids that they don't find appropriate.* Then it's up to Bank to deal with it or up to national to negotiate. We had seen negotiations go through.


 Isn't this what's been said? :001_unsure: :icon_confused:

HUD rejects the bids that don't comply with their standards or cost estimators. Pretty sure we're all in agreement on this.

However, any national/regional/bank/asset manager/etc. negotiating a new price for services and then blaming it as "HUD adjusted the price", is where the crock of  comes in. Only I negotiate prices on behalf of my company.....


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## raspres (Jan 16, 2015)

HUD can cut bids. The mortgage servicer can too. The National P&P company submits the bid to the servicer. The servicer sends the over-allowable request to HUD for any services that are over the allowable limits. HUD can approve, reject, or reduce the request. If HUD denies it, but it's something that has to be done then it's the responsibility of the servicer to get it done. The servicer's P&P dept. will review and approve, deny, or reduce the request. They sometimes reduce the bids because anything that is over the allowables that HUD denies will be a loss for them. It works the same for Fannie Mae, Freddie Mac, etc.


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## mtmtnman (May 1, 2012)

raspres said:


> HUD can cut bids. The mortgage servicer can too. The National P&P company submits the bid to the servicer. The servicer sends the over-allowable request to HUD for any services that are over the allowable limits. HUD can approve, reject, or reduce the request. If HUD denies it, but it's something that has to be done then it's the responsibility of the servicer to get it done. The servicer's P&P dept. will review and approve, deny, or reduce the request. They sometimes reduce the bids because anything that is over the allowables that HUD denies will be a loss for them. It works the same for Fannie Mae, Freddie Mac, etc.



They CANNOT reduce a bid and then force you to do the work. They can DENY the bid and send another vendor for 2nd bid..........


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## BPWY (Apr 12, 2012)

raspres said:


> HUD can cut bids. The mortgage servicer can too. The National P&P company submits the bid to the servicer. The servicer sends the over-allowable request to HUD for any services that are over the allowable limits. HUD can approve, reject, or reduce the request. If HUD denies it, but it's something that has to be done then it's the responsibility of the servicer to get it done. The servicer's P&P dept. will review and approve, deny, or reduce the request. They sometimes reduce the bids because anything that is over the allowables that HUD denies will be a loss for them. It works the same for Fannie Mae, Freddie Mac, etc.






You happen to have any proof that HUD cuts bids?


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## JoeInPI (Dec 18, 2014)

mtmtnman said:


> They CANNOT reduce a bid and then force you to do the work. They can DENY the bid and send another vendor for 2nd bid..........


Absolutely. This is why we may not get a lot of jobs that we bid. I bid what I need to make money at the job. If it's over the allowable- I really don't care. *My* pricing is *my* pricing for *my* area related to *my* costs for *my* service level. If it's too high, deny it, and send a second vendor. If I need it bad enough, *I* will start to bid lower. Some dude in a cubicle states away at HUD or wherever isn't going to set my pricing. Take control of your business!
This is also why you NEED private customers like realtors, muni's, local banks, credit unions, etc...

Take a random cleanout/ICC or something for example.

National quotes them: $4,000
Regional gets it for: $2,500
Sells it to a hack for: $1,500
Hack does a **** job and realtor/broker has a turd house to try to sell.

Tell your realtor/broker to skip the national headache,
Negotiate with the realtor broker for: $3,000
Do the job ourselves with _actual working equipment_
They have my cell phone if they want something else done that they forgot about, no ridiculous bidding with nationals that don't care about timeframes.
We actually winterize everything!
We don't break the toilets to avoid cleaning them
Leave everything looking really nice
Realtor/Broker sells house quickly, and saves $1,000 in the process. 

Find new customers, and stick to your price. If they deny it, so what? There is always another customer- find them and prove them wrong.


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## UnitedFieldInspections (Dec 20, 2012)

I will NOT work with a bid that has been readjusted.If that's the case reassign it i have overhead,licenses,Insurance,Trucks,Fuel Cost and i know what i need to get to keep us running and in business.I tell them all the time We are Sub contractors not employees I was told i am a cherry picker lol.Kiss the back of my balls lmfao.I love it when some lady who never lifted a bush in he life tells me how to do my job.The other day they didnt want to pay me for a foundation inspections because qc didn't think i was "Qualified" Funny thing is one of my licenses Covers Foundation Work.Lmfao


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## JoeInPI (Dec 18, 2014)

UnitedFieldInspections said:


> I love it when some lady who never lifted a bush in he life tells me how to do my job.


 
:whistling2:

:thumbsup:


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## GTX63 (Apr 12, 2012)

UnitedFieldInspections said:


> We are Sub contractors not employees I was told i am a cherry picker lol.


Can someone explain why "Cherry picking" is a bad thing? Seems like the best way to make a profit and sustain your business to me.

The HUD cuts bids or not myth just won't go away as long as people keep falling for it. About the same as the mob killed Kennedy, guns are bad and inspections for nationals is a lucrative business.


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## UnitedFieldInspections (Dec 20, 2012)

GTX63 said:


> Can someone explain why "Cherry picking" is a bad thing? Seems like the best way to make a profit and sustain your business to me.
> 
> The HUD cuts bids or not myth just won't go away as long as people keep falling for it. About the same as the mob killed Kennedy, guns are bad and inspections for nationals is a lucrative business.


I am selective to what we accept that's the point of being a sub contractor.I dont want to deal with $20.00 lock changes with no allowables drive 30 mins away and spend 3 hours on a property that wont cover my gas.We are contractors licensed & insured not hacks with no overhead and driving around cutting lawns out of a caravan.We have overhead a shop & office that the bills have to be paid.We Do not take on a job with major liability i wont paint over mold with kilz.I will however properly identify the problem of the mold and correct the issue and remidiate the mold such as remove the drywall and replace etc to correct the issue.I don't understand how this industry has gotten this far doing what they do.We havent moved a pebble off of a property until its approved and signed off but yet it seems over the last few years every time we are sent to a property we notice things missing,tools,mowers etc.They get what they pay for.These allowables are a joke.How can they base these prices in florida and in New York the money is much different?I get asked from customers all the time - I got 3 estimates and everyone of them is a much different price -/+ everyone has differnt overhead and knows what they need to get for that project to keep the lights on.Just a thought :whistling2:


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## JoeInPI (Dec 18, 2014)

To me, Cherry Picking = Bidding or accepting jobs that make sense for your company.

Nothing wrong with that.


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