Tuesday, June 9, 2015
We Have Your Back When it Comes to Remodeling
That is just what it means to be a 203k consultant or renovation/remodel consultant. Most people don't remodel their home very often and guess who knows it? That is correct, the contractors know it and quite often they capitalize on it.
Task was to add a second story to this home, the budget was $150,000, well, it couldn't be done but I felt it could be done for $159,000 and the borrower agreed that it was still doable so we moved forward.
It is my job to create a scope of work and give you a bid on what I think a contractor should be charging for this specific SOR (scope of renovation) as so many lenders call it.
Next step is for us to print out the SOR without prices in it and give it to the borrower to use to solicit bids. We don't like to let this out of our control so we send it to the borrower's contractor selection with a copy to the borrower so they can see our comments to the contractor and that way we maintain control so the lender can close the loan quickly.
Once we have a "confirmed bid" from a contractor so our bid is "validated" the appraisal is typically ordered. Many will order the appraisal with our bid paperwork as the scope of work doesn't change, only the price may change slightly.
Now the bids come in, in this example the borrower had a contractor but she made a crucial mistake, she let the contractor know that she was so excited to have them working on her project to take this bungalow home and turn it into a "craftsman" style home. Her contractor bid the job at $298,000 versus my bid of $159,000. Yikes! What do we do now?
That is easy. We merely send it out to another contractor in the area with no preconceived notions. The second bid came in at $161,000. Just 1/2% higher than our original bid.
Conclusion: Rest assured we have your back. When the contractor's know that they will typically bid a bit tighter in the first place.
If your contractor isn't providing a bid for the job up front before the contractor's bid come in your consultant isn't doing their job per the guideline.
Posted by 203konline