Friday, July 11, 2014

Watch Out for 203k Consultants That Short Circut the Process

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A 203k Consultant should visit the site, determine what needs to be done to bring the property up to the FHA MPS (minimum property standards) then add the wish list items, if any, from the borrower. The idea is to provide the borrower with an estimate of the repairs prior to getting their contractor bid. This enables the borrower to know in advance if his bid is a "fair bid" or not.

Having said that there are a good many consultants who will send out a contractor or worse yet, have the borrower get a bid prior to the consulting meeting at the property so they can use the contractor's bid to create their "scope of work". This is not the way to do it.

I had one not too long ago where the borrower called me to see how much would it cost to do her consulting. I asked what her budget was as our fee is based on the amount of construction on the project. When I quoted her $800+mileage for her $65,000 project she told me the other guy she had been talking to was at $350.

I told her that my price is quoted right off the 1994 HUD price list and I would doubt very much if the other guy would do the job for $350 as we have had no increase in fees for many years and it would be an idiot who would charge less than the going rate.

It was about a month later when she informed me that he collected $350 up front at the time of the inspection... a "trip charge" then billed $800+mileage. She ended up paying more from this other "consultant" than she would have had she used our services.

Watch out for those "low ball" quotes as many are "bait and switch". He then proceeded to have her get a bid from a contractor before he would do the write up.

Typically we see a house before a contractor then provide a scope of work and bid within 4-5 days. This lets the project move forward while we wait for the contractor bids to come back to us.

Make sure your local home inspector is trained correctly. If you need the name of a good one in MS try Charlie Sessums at Alpha Building Consultants