Apply HN- FixSmarter: Mobile App So You Don't Get Screwed by Your Contractor

I agree the current model is broken and I also think this can improve it incrementally...but I think this problem needs to be rethought from the ground up.

I think multiple bidding strategies or price comparison is inherently flawed for service businesses. It forces adverse selection on both sides. Essentially, to the buyer, all contractors are vetted, licensed, and have insurance, and they have no other context, so they are forced to choose the cheapest bid. However, the sellers (contractors) don't know what type of client this is, how much they might try to change scope, or what the actual project might end up costing, so they are forced to charge as much as possible to cover the unknown.

By forcing them to bid on the project, the better contractors, who are more aware of the potential costs and risks will bid higher than the less competent ones.

Essentially, this will skew the process in a way that the customer will always end up with the worst vendor.

Further, the contractor needs to confirm price upon inspection. If this leads to changing bids, as most industries do, either the customer will be too annoyed with your site and the contractor, or just go with the new bid...and contractors will quickly learn to bid low and quote higher on site.

I would love to hear your thoughts about this and how you hope to overcome adverse selection from a bidding model.

For what it's worth, I have my own ideas for the space, but they aren't technology driven solutions, they are people driven solutions.

@davemel37 I like where you're going with this, and I agree that this is a very good problem to address. I wonder if you could design some sort of system similar to Uber pricing algo where you give an estimate ("[Startupname] believes that this job will cost between $70 and $120"), and then include various multiples (I imagine that getting a window repaired in Menlo Park will cost more than doing so in Topeka, KS) for locality, current demand, etc.

@SocksCanClose Thanks for adding to the ideas. The range is a great way to do it. range for the bid with an explanation in the video by a contractor. The video bid makes it much easier for a contractor to express his knowledge and expertise to convince the consumer that he is right for the job. A price (in the bid range ideally) gets confirmed upon inspection of the job and the money gets held in escrow.

I think the challenge is in consumer psychology and emotional fear of looking like a fool more than the need for better data. This is why recommendations from friends and neighbors is the go to solution today.

I specifically think the problem is in information asymmetry about the true costs to service the project. Especially considering that some jobs or parts of jobs need deep expertise and others are contracted out to the cheapest labor possible.

In other words...there are things the contractor knows that they consider trade secrets and wouldnt want to reveal them...that is what consumers need to know to be comfortable IMO.

I have a project I am working on along those lines, but its not trchnology driven.

Thanks for the comment @davemel37. Excellent points. I have been playing around with this issue because I agree the bid system is flawed. Just as when contractors come to the house to bid, I want to go with the lowest bidder but then fear I'll be getting the worst work. Many times I choose based on price and a gut feeling after discussing the project. I believe the way to overcome this is video replies by the contractor discussing the job. The reply will give a customer a sense of the contractor and their knowledge/experience for the project. The ability to bid with a video combined with a range bid explaining in the video gets both parties closer to an informed decision they could get with an in person inspection. The video record on both sides will also assist a mediator in reviewing the project. After the consumer picks a bid, the contractor will inspect the job and confirm or revise price on site. The new price must be agreed to by consumer and money for the job put in escrow with FixSmarter. If a contractor opens up a wall and finds mold or something else living in the house, the parties would then be able to revise price and increase escrow. As the site progressed, I envision it could act as a virtual construction manager where the job is broken down into segments so that escrow can be released along the way (but this would be down the road). The system is flawed generally and I'd love to hear your ideas. I think this solution takes a big step forward because it addresses two big concerns- price certainty for the consumer (revised with full disclosure when unforeseen problems arise) and payment for the contractor. I greatly appreciate your input.

Happy to chat about my ideas. Email is in my profile.

Video sounds interesting...I wonder if its a barrier to taking action.

Thanks very much. I will shoot you a message. Video is a barrier but also a strong vehicle that should get better and better

I am pretty into this! I've never been a homeowner or landlord, and a big reason why not is that I don't want to have to keep a rolodex of people to call when things break. I'd love it if you guys would fully automate this for me, and am willing to pay a lot (because my alternative is the rolodex thing, or a property manager).

Idea one: I'm a renter, I want my landlord to fix something for me. Can you enable me to video it with your app and get the landlord to either signup, or at least fix it with his normal contractor?

Idea two: Say I'm a landlord, my renter complains about something being broken. Instead of hiring a property manager, I want to make my renters download the app, submit a fix request and then I'll approve the proposal thru you guys. I'm not a landlord but I could imagine wanting to become one if I didn't have to deal with handling these requests.

I think this is one of those ideas that's hard to distribute, because you aren't needed often enough for people to even remember your app's name when they have to get something fixed. So you'll need a really compelling distribution strategy; maybe landlords can talk to each other or you can go through landlord associations or something.

@bestattack Big thanks for your comments. That's an intriguing angle and one we have not discussed yet. It could work very well for landlords to get people out to their jobs. I also think many small landlords do not have contractors they can trust so they could also use it to farm out jobs. Greatly appreciated!

What kind of arbitration agreement am I signing up for as a contractor?

As a contractor, why would I do this instead of waiting for customers on Angie's List?

What if my initial estimate was wrong and the window costs 2x what I thought it would cost?

It would be a streamline AIA arbitration agreement. Angie's List and the other websites have fees in order to get leads. When you get a lead, you are one of multiple leads and you are charged whether or not you get the job. Here the contractor has the fee extracted from the payment he is receiving. If the initial estimate is wrong, the contractor can change estimate (joint approval). As the company developed, a method would be instituted to evaluate the percentage of time/amount a contractor sticks to original bid. Thanks for commenting.

Also, supplies would come out of escrow as agreed and needed. Thanks again.

what about other ongoing costs, like labor?

@davemel37 I think it starts with smaller jobs but I plan on also allowing for releasing escrow for completion of labor on bigger jobs (with video documentation on each stage)

Considering all the administrative overhead why would a contractor use this service?

How will Fixsmarter comply with state insurance laws when selling insurance to contractors?

How would the dispute resolution process superior to that of organizations like the American Arbitration Association that is typically standard in the US construction industry?

How does holding the money in escrow resolve with state various mechanics lien laws?

@brudgers thanks for the comments. The contractors that I've been working with on this believe it cuts down on the overhead. They have to be somewhat tech savvy but they welcome takingaway the billing and collecting aspect of the jobs. Fixsmarter wouldn't sell insurance but provide referrals and get referral fees. I think it could comply with the state insurance laws in that capacity. The AAA is great but it is basically a mini-trial and very expensive to get through. This would be agreeing to resolve dispute internally so the parties would be giving up that forum. It would be like when people submit to the jurisdiction of the People's Court rather than going to state court. Mechanic's liens secure non-payment on a job. Here, the money would be in place so that a contractor would not have to start a state court proceeding to enforce a mechanics lien. Appreciate the feedback! I still have to fully vet all the issues that you raise but my preliminary surveys and interviews point to them working out.

How do you scale decision making with regard to whether or not a job was completed to spec? What about conflict resolution in the case of a disagreement?

Good point. Escrow gets released if both parties submit approvals. If there is a dispute, videos of what was done are submitted to independent mediator who has final say (reviewed in house as well). The customer objecting will have to pay a small fee to object which is refunded with escrow if they are correct. Thanks for comment.