# Three-bid rule

*Also called: rule of three bids, three quotes, competitive bidding.*

**Definition.** The three-bid rule is the common practice — and, for many property managers and HOA boards, a written policy — of collecting at least three competing bids before awarding work above a certain value.

Three is a threshold, not a magic number. Its purpose is to establish a defensible market price and to demonstrate that the award was not arbitrary, which matters when you are spending someone else's money.

The rule fails in practice for a mundane reason: contractors do not respond. Chasing three bids for a $6,000 job can take two weeks of phone calls, and the third bid often arrives too late to matter or never arrives at all.

A rule satisfied with three non-comparable bids satisfies the paperwork and not the intent. Three prices for three different scopes still do not establish a market price.

## Why it matters

For property managers and board members the three-bid rule is often a fiduciary obligation rather than a preference — and the file needs to show not just three numbers, but that they were all bidding on the same job.

## Related terms

- [Apples-to-apples comparison](https://quotrium.com/glossary/apples-to-apples)
- [Bid leveling](https://quotrium.com/glossary/bid-leveling)
- [Scope of work](https://quotrium.com/glossary/scope-of-work)

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Source: https://quotrium.com/glossary/three-bid-rule · Quotrium — Comparable quotes for property work