One Bid Came In Low: How to Tell a Bargain From a Warning

You have three bids in front of you and one of them is well under the others. Maybe two hundred thousand under.

The instinct is to feel lucky. Sometimes you are. Usually you are not.

A bid that far below the others is rarely a discount. It is usually an error, and the thing about an error in a construction bid is that it does not stay with the person who made it. It becomes yours, in installments, starting somewhere around the time the framing goes up.

Here is how to tell the difference before you sign.

Before you compare the bids, get one number that isn't a bid.

We publish what a foothill home actually costs to build in 2026 — custom, semi-custom and renovation, ungated, no form. It won't tell you which bid is right. It will tell you whether the low one is in the neighbourhood.

SEE THE NUMBERS

What happens when a builder underbids

A builder who bid too low does not find out on day one. They find out somewhere around the middle, when the money meant to cover the remaining work has already been spent.

From where you are standing, it arrives as a sequence.

First the change orders. Things that were always going to be part of the house turn out not to have been in the contract. Each one is small and sounds reasonable. Together they close the gap between the bid and the real number, and you are the one closing it.

Then the corners. Rarely dramatic. A cheaper window package. A sub who works fast rather than carefully. The kind of thing you notice in year three rather than month three.

Then the delays. Your builder is now taking other work to fund yours. Meanwhile your construction loan accrues interest on a house nobody is currently building.

And at the far end, the job stops. The builder walks, or the business folds. Either way you are holding a partly built house, a loan, and the question of who will finish someone else's work. That costs more than starting clean, and everyone who bids it knows so.

Not every low bid ends there. Enough do that the sequence is worth recognising early.

Why bids come in low

Here is where most writing on this subject goes wrong. It assumes the low bidder is trying to cheat you.

Sometimes that is exactly what is happening. A number priced deliberately low to win the job, with the gap recovered through change orders later, is a real practice and an old one.

But most underbids are not dishonest. They are simply wrong.

Estimating a custom home properly is slow, unglamorous work. It means a full material take-off, real numbers from the subcontractors who will actually do the work, and a line for every category rather than a round figure for a whole trade. Plenty of builders do not work that way. They look at the plans, think about the last house that felt similar, and put a number on it.

That is a guess. Guesses run high and low, and the low ones win bids.

If a builder underbids, they are not going to pour their own money in to make up the difference. You make up the shortfall, or the project fails.

Which means the useful question is not whether this builder is honest. It is how this number was arrived at.

How to check a number before you trust it

You do not need to be able to estimate a house yourself. You need one independent figure to compare against, and there are three places to get one.

1. Look at comparable finished homes. Not listings for the house you want to build. Recently sold custom homes in the area you are building in, at roughly the size and level of finish you have in mind. A local agent who works that market can pull them in an afternoon.
   

2. Talk to two or three established local builders. Not for a bid. For a range. Anyone who has been pricing foothill projects this year can tell you what a house like yours is running, and most will, because it costs them nothing and occasionally wins them a client.
   

3. Ask a construction lender. Lenders underwrite these projects and see what they actually close at. They have no reason to flatter anyone's number. This is the most overlooked of the three and often the most useful.
   

Then average them.

You now have a rough figure drawn from three unrelated sources, none of whom are bidding on your job. A bid that lands ten percent or more below that number is not automatically wrong. It is automatically a question. Ask it before you sign rather than after.

While you are checking things, verify the licence. It takes a minute, it is public, and the state also publishes a straightforward guide to what else is worth confirming.

What a realistic starting number looks like here

For the California foothills in 2026, our published starting points are:

• A fully custom home from about $1.2 million, for something around 2,300 square feet.

• A semi-custom home from about $850,000, in the 2,000 to 3,500 square foot range.

• A significant remodel or addition from about $150,000.

Those figures exclude land.

You will notice there is no price per square foot in that list, and that is on purpose. A per-square-foot rate averages away the two things that move a foothill budget most: what your particular lot demands before anything is built on it, and how the house is finished. Two homes of the same size, twenty minutes apart, can differ by six figures for reasons that have nothing to do with floor area. We go into that here.

A rate is a comfortable number. It is just not a useful one.

Questions that separate a real bid from a guess

Four questions. Ask all of them, of everyone, including us.

1. How many separate cost categories are in this estimate? A real one runs to roughly a hundred. If the answer is a dozen line items for an entire house, you are looking at a guess in a nice font.
   

2. Are the subcontractor numbers actual bids, or allowances? An allowance is a placeholder. A bid built mostly from allowances is a bid built mostly from numbers nobody has committed to.
   

3. What is excluded? Site work, utilities, septic, landscaping and permits are the usual omissions, and none of them are small on a foothill lot.
   

4. If this comes back over budget, who pays for the redesign? The answer tells you how much confidence they have in their own number.
   

A builder who does the work properly will enjoy these questions. One who does not will get vague, and vague is the answer.

How we bid

During design we price roughly a hundred separate cost categories, using real bids from the subcontractors who would do the work rather than allowances. By the time you sign a construction contract, about 95% of what your home will cost is known and written down.

That is less a sales pitch than the reason we can hold a number. You cannot commit to a budget you have not actually built.

If you have bids in hand and one of them is bothering you, send them over. We will tell you what we see, whether or not ours is among them.

Send us the bids. We'll tell you what we see.

Where the numbers diverge, what's missing from the low one, and which questions to take back to the builder who wrote it. Thirty years pricing foothill projects means we usually recognise the gap on sight. We'll give you a straight read whether or not ours is one of the bids on the table.

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