The FHA 203k is no different that any other construction project in many respects. NO ONE wants to have two contractors on the same job at the same time. Possibly an insurance issue. Whose fault is it if something happens.
Every time we do a 203k project with a new contractor we get these interesting bids like "I'll drywall this house for $13,000" with no SF designated and no idea what the cost he is charging per SF. They typically don't want anyone shopping their prices to another contractor. This is a valid concern but FHA requires we identify that information as that is the only way we can actually see if the prices are fair and that is what we are all about. We try to get a fair price, not inflated, for our client without bankrupting the contractor.
How long does a typical project take to completion? What amount of construction is in a typical 203k project? These are difficult questions but I'd have to guess $75,000-80,000 for a full 203k and they should be completed in 4-6 months, while a Limited 203k will always be completed in 2 weeks to 60 days tops.
How hard is it to get an extension? The first extension is relatively easy to get but subsequent extensions are much more difficult.
I had the longest running 203k in my career a couple years ago, it was also the longest one Flagstar Bank ever had and it was due to the borrower's insistence that he be able to use two contractors. What he did was play two against each other and take the lowest bid items from each and it took sixteen months before we just fired the one contractor and had the first one complete the work at his price. This should never have happened and would not ever happen again. It was a nightmare project and seemed like it was never going to end at times.
He shopped the bids. In other words he had two people bid the project and went back through the bid and chose the lowest items from each guy. That is exactly why we don't allow that behavior. There is no shopping of bids... you can take the lowest bid or the highest bid or any one in between but you should look at the bottom line and see who is most competitive.
downtown
Comments (3)Subscribe to CommentsComment