We can't speak for everyone in the USA but we think this is pretty typical for most.
We get asked all the time “what is the largest FHA 203k renovation project you’ve ever done?” Why that is important to some is beyond me but it is right at $450,000 and there were several, then we had a couple in the $425,000 range, then it drops to $325,000, $250,000, $220,000 and those are not all that common.
Then we get to the more common ones which range from $200,000 on down to $100,000 which make up about 30% of the work. That leaves about 70% roughly between $25,000 and $100,000. Our average fee is $800 which is a project size between $50,000 & $75,000.The largest conventional project for us was $497,000.
I think the most interesting thing is that now and again we will get a call from someone who only researches the fees and not the reasoning behind the fees. I have one right now where the borrower has convenced himself that he doesn’t need a consultant. Maybe he is right, maybe not.
We typically save our clients many times our fee. That is to say you can pay $800 and possibly save thousands of dollars. Don’t be penny wise and pound foolish.
Typical scenario: We put a bid specification together on a project and provide a bid so the client understands that we can get this work done for $X then we put it out to bid to contractors so they are all bidding off the same list. Believe it or not, it doesn’t matter how carful a home buyer is they won’t “tell the same story” as to their wants and needs to each contractor, it becomes a guessing game and each contractor will hear it just a little differently.
On the other hand by having the same “specs” for them all you get a much more uniform bid grouping. We did one in the same area as the client we are working with now that our bid was $159,000 to get the work done… out client had a contractor picked out and sent the “specs” for bid… which came in at $298,000. Our fee was about 1% but she knew more than the contractor did about her request by being armed with our bid.
The client then put the bid out to another contractor and it came in at $161,000. That client saved $137,000. Was it worth our fee? Of course it was and that is what we do when allowed to do it our way.
What happens when the client comes armed with three contractor bids before they hire us… makes our job a little more difficult when we have to add a few items required by the FHA 203k program like grading that is nearly always missed, attic insulation, weatherstripping, etc.
When armed with bids in hand our job is no longer to create a bid specificaiton but to correct someone elses specification. We then attempt to see if the contractor’s bid they provided is “reasonable” for the project.
The borrower spends lots of time getting three bids, then we tell him they aren’t reasonable and he can get this work done for less money, allot less money, he is quite often upset, embarrased, a whole list of feelings that weren’t necessary have to be dealt with.
Please let us do our job for you and you will be most surprized to get it done in allot less time that it took you in the first place and at a considerable savings… many times (not all the time). If you have done a bunch of work and obtained three bids all isn’t lost. We may be able to do a “plan review” for about 60% of the consulting fee so you did save money but if we save you $100,000 we will be looking for our full fee… lol
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