Consultants have your back when it comes to remodeling

Consultants have your back when it comes to remodeling

Published 2/19/2024

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.

The task was to add a second story to this home and change from a "bungalow style" home to a 2-story "craftsman style" home with a budget of $150,000, well, it couldn't be done but I felt it could be done for $159,000 plus contingency and the borrower agreed that it was still doable so we moved forward. The photos in this blog post are the same home before and after the renovation.

It is the consultants 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. If your consultant isn't bidding on this project before you solicit bids from the contractor(s) then your consultant ISN'T doing their job and you are not getting all of the service you are paying for.

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 sent it out to another contractor that neither of us had any experience with, no preconceived notions. The second bid came in at $161,000. Just 1/2% higher than my 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.

This has become more and more important for you since our purchase or refinance and renovation loan limits have climbed to $3,000,000. There are lots of homes in our area that qualify for these higher loan amounts. We had three last week that were purchases at nearly a million dollars plus the renovation money which is well over the FHA and FannieMae loan limits. Not a problem, we have you covered.

203k Software and Training Enquiry Form

Fill out our renovation inquiry form to connect with our experts. Get tailored advice for your consulting needs today!

Powered by