Wednesday, August 5, 2015

How Do I find an FHA 203k Consultant?




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That is a good question. You can go to the HUD website and find one or you can go to Yadzooks website and find one, or you can contact us and we'll line you up with one. The problem is going to be the same in both cases. The question you should be asking is "how do I find a good FHA 203k consultant?" 

They are not all the same just like all Realtor's are not the same. I see some that go way overboard to provide a quality service for their clients and others that do the bare minimum and they draw the same fee. So please don't just look for a consultant, find a good one. 

The biggest difference is going to be in the service they provide to the client. We all work off the 1994 HUD guideline for the most part at least as far as it goes. No one in his right mind would charge less than the fees described in that guideline. No raise in 20 years... mmm. that is your first clue.

 Example 1 - If the consultant tells your client they will do the inspection for $350 "beware". I lost a job because I quoted $800 plus mileage right off the guideline while my competition quoted $350. He got the job. It involved a room addition where he provided a penciled in sketch that barely readable... oh, how did I know he did this? The client told me and showed me when the consulting invoice came in at $800+mileage. Oh, and that first $350 was a "show up charge" for the initial inspection.  This client ended up paying $350 more than we would have charged and we do a professional looking sketch of the addition with a CAD program as part of our fee. 

This consultant also had a contractor come out and provide a bid, then wrote the specifications around that bid.  

Example 2 - Client calls us and asks for a "feasibility report", what do you charge? My competion charged $200 and then charged $700 for the consultation - I quoted $700 for the consultation to save the client the $200 fee and get the loan closed faster. All the lender saw was the $200 vs the $700 fee and guided them to the other guy. That is all just fine but the loan would have closed faster with us and at a $200 lessor cost to the client. Don't always choose the lowest up front fee and assume it is the best way to spend your client's money. In this case the loan officer chose to put his commission and the Realtor's commission back a week or three because he thought he was saving his client money. BTW, you don't need a feasibility report for a full 203k it is an additional fee that in many, most cases, it isn't necessary. 

What should a 203k consultant do for their money? 

The consultant should be making their inspection independent of the contractor and created a "bid request and job specification" then priced it out so the client has an idea of the cost of this project. Then that list goes out to the contractor(s) for bid. This way the client is informed up front and the contractors all bid the same list.