How many bids should I get on my FHA 203k project?
The HUD guideline suggests we get three bids on every project. Does that mean I need to get three bids? No, not necessarily. In an ideal world it would be great but even as slow as contractors say it is they don’t want to bid against 2 other contractors on the same job. They want to have a reasonable expectation that after so many bids they will get their percentage of the jobs. That 3rd contractor bidding pushes the odds up to high to waste their time. Sad but true. Many times when the contractors are aware you are taking it to three they won’t even provide you with a bid. That is exactly what happened recently on a Streamlined k a lender friend was working on. They had three contractors bid and never did get one of those bids in before it closed escrow with the one we got for them.
Then is two enough? Many times we go to a job site and find the borrower already has a contractor lined up that they have decided to use.
In the case above if I already have a contractor why do I need a consultant? Simple, the consultant’s job then is to determine if your contractor’s bid is reasonable for the project. It is always good insurance for you to get that “second look” either from another contractor or from a consultant.
The consultant will bid the job, and two contractors bidding, that is three. The consultant bids the project to let the borrower know what the project should cost. I did one bid for $159,000 and the borrower's first bid came in at $298,000 but the second came in at $161,000. This is the service we provide. The borrower is forearmed with the cost of the project so they are more informed and no one can take advantage of them during the process.