Mike Young

Hey everyone... thanks for all the business. Having to move to larger offices. New address is 4350 Main Street, Suite 215, Harrisburg, NC 28075-7448. The new phone numbers won't be working till the end of next week but you can still reach us at 704-451-1599 and for you land line users out toll free number is still 1.877.207.6565 Again, thank you for your support. We appreciate it more than you know.

It is interesting how a consultant turns in a bid specification to contractors to obtain the "contractor's" bid and then while going over it for "reasonableness" cuts the contractor's numbers considerably... Hey guys... wake up. It is our job to determine if it is reaonable not to tell the contractor what it has to be.

What are your choices? Get more bids... you may find out that YOU were wrong and all of the contractors bid this job higher than you did. In any case it is there bid... either use it or don't use it but it is not up to you to determine their overhead and cost of doing business. If you cause a contractor to go bankrupt when they decide to use YOUR numbers instead of theirs... are you going to feed their family? I don't think so... Get more bids from additional contractors and if you find that YOU were wrong, award the contract to the first contractor and appologize for YOUR error. On the other hand you might be right.

What about the 203k appraisal. Based on the job specs and subject to them the appraisal is performed. What is the appraisers duty? Develope an opinion of value based on these assumptions and recent sales in the subject property neighborhood of similar quality homes with similar updated condition making adjustments for the differences. The fewer number of adjustments the better the comparbles were. What is NOT your job? To tell the contractor he/she should reduce their bid to get the cost per SF down. That is clearly NOT your job.

What other options are out there? The borrower can cut the scope of work down thus reducing the cost but that might then lower the appraisal, yikes! So how about bringing money to the table? Yes, that is clearly an option. If the borrower understands that the home is "overbuilt" for the neighborhood they can make an informed decision to add more money to the project to get those additional items completed. Remember that this IS their home and there are NO RULES when it comes to the home you want to live in. So, borrower can bring money to the table to pay for additional items that need to be done and thus the loan can close. The money should be added to the rehab loan amount so all the money to complete the project are in the fund and ready for disbursment. Those monies are the first disbursed to insure they are used according to the guideline.

I must be missing something with regards to the new rules for FNMA and Freddie appraisals having to go through a management company and the appraiser having to take it in the shorts.

I have a good, lets say a very good appraiser who was charging $400 for an appraisal. Now someone decided that an appraisal managerment company should come in and "not charge for their services" but lay them on the appraiser. So, an appraiser who is worth $400 per appraisal is now being offered $250 for his/her work so the appraisal management company can make money though they had nothing to do with the appraisal... a good appraiser just won't take the hit so they put it out to anyone with a license... gee, it seems they are going to use the "newbies" in the business that don't know any better.

It sounds to me like we are shooting ourselves in the foot again. Instead of getting better appraisals we are going to use green appraisers who don't have a clue in most cases. Punish the good appraisers or make them hurt till they bleed and take the lower fee just to eat. NOT FAIR. If in fact rules have been made for whatever the reasons to use a management company.... let them charge for their work not for the appraisers work. A year ago it was illegal for anyone to take a portion of the appraisal fee and not provide any part of the appraisal, now it is a law to use a management company so let them put their fee on top of the appraisal fee. Maybe they are already doing that and just not disclosing it. They could be making more than the appraiser in that case. Wow. Wake up and don't run good appraisers in the ground, they need their fee, all of it or you will be stuck with a lack of good appraisers on the market very soon.

I feel for you who still are appraising.

Watching the news for you... Taylor Bean and Whitaker have been suspended from making the FHA loans as of early this monthw. The FHA notification system just sent out a notice on this. If you have a 203k with them and it hasn't closed better get hopping to see if it even will close. YOu may need to move the loan to another lender.

What suits you. If you are a borrower that is looking to get into a property that needs rehab work in any amount... the 203k is a natural choice. If you are an investor then your only choice is one of the more conventional "construction loan products". So both answers are correct the only thing that matters is what the other parameters of the loan may be.