Cost Estimates on VC Sheet?

[BigBlueGA]

Can anybody quote me the requirements for doing cost estimates for repairs on the Valuation Conditions sheet (8/99)? Thanks in advance..

- Brandon

 

[larryhaskell]

Brandon

If you mean how are they calculated, the FHA Protocol says use standard cost information such as M & S. If you mean how are why are we required to provide such information I can't help you there other than to say its just HUD.

 

[BigBlueGA]

Well, I mean how are we required to report it.. I have a nightmare house with a ton of repairs needed on the VC sheet, but they are all small repairs and I am having a hard time coming up with reasonable repair estimates for them on an individual basis.. I think I can give a good ballpark figure for the overall total. I looked into the FHA guidelines and they didn't get very specific about this part of the appraisal.. I'm wondering now if we are even required to give a repair-by-repair estimate or just give an overall estimate in the blank on page 3 of the VC sheets where it says "Provide a summary of estimated repair costs".

 

[larryhaskell]

I give a total amount on Page 3 but keep a copy of the estimate in my file if it is significant. If a contractor is involved by the time I do my inspection I get a copy of their estimates. In certain cases like on a 203K a builder is almost always involved. I also have a contractor who will provide an estimate for a small fee ($25-50) in hopes of getting the repair business down the road. Depending on the client, I may or may not add this fee to the invoice. Hope this helps.

 

[Restrain]

The last page of the VC sheet is essentially a summary of the previous pages. I cite the costs on this page and give the total in the appropriate blank. If the repairs become too extensive, it may be necessary to convert the type of loan from a typical FHA loan to a Remodeling loan with purchase.

 

[Farm Gal]

I think I can give a good ballpark figure

Brandon, you are up against a problem many of us wrestle with.... if there are a few repairs that are not trade related the cost for the whole IS the sum of the individual parts...!

When there is a huge list of related repairs or just a sufficient number to warrent a 'general' contractor even if it is 'homeowner to oversee the process', then individual repairs costs is NOT equal to job total...

I have been told that the report is to show

total cost to cure as per what your local area costs would be for the job as a whole

....BUT CHECK with your area HOC... :roll: and get a name and time of who you talked to :twisted:

 

[Ted Martin]

I attach an ending addendum to the VC where I paste in the cost estimate from my repair and remodeling software. I'm using the Craftsman 2002 National Renovation & Insurance Repair Estimator $50+/- at Barns & Noble, for the $50 you get both a printed cost guide and a program. I work up the estimate in the cost program and save it as a text file which I then import into the VC ending addendum page. I'm using ACI software but the other appraisal programs probably have a way of attaching an addendum to the VC. When I'm working up the repair estimate I group the repairs by VC item and subtotal them. I do place the total estimate cost of repairs in the appropriate field on page 3 of the VC. I do it this way so that the repair costs do not transfer to the Homebuyer page. The way that the ACI program works the VC comments from page 4 automatically transfer to the homebuyer form, but the ending addendum page does not.

I have no problem providing the buyer with my observations on the homebuyer form but I don't really think that providing them with a detailed repair cost breakdown is a good idea. I'm an appraiser not a contractor. Even though I have made a good faith effort and used publish cost guides which are likely to be used by local contractors I prefer not to provide a document which can be thrown back at me later when there is either hidden damage or a cost overrun.

 

[AC King]

4150.2, 5-1, B. Page 5-3: "The addenda include a provision for current market assessed value and a summary of estimated repair costs."

A detailed estimated cost to cure is not required by HUD for typical FHA appraisals; only a summary of your estimated cost is required.

 

[Ted Martin]

True. Except for HUD REO's which do require a breakdown for those properties with less than $5,000 in needed repairs. Over $5,000 no estimate required.