I met again with the contractor who was giving the lower bid last week and at the end of it all, it didn't turn out well and I am now feeling like I'm starting all over again!
This contractor really wants to help me and said he'll do everything for $18,000, but wanted for me to buy most of the material! After thinking about it a few days, I realized that's not going to happen. I cannot spend my money like that, I rather finance!
I received the bid from the company that was still working on it and it came in at $27,000. Not bad... but it went over my budget by $9,000. There are a lot of items that I can remove to bring it down to $18,000. I met with them yesterday and the guy really was disappointed I was cutting all of these items. After our meeting, he said he'll talk to his boss, but honestly... he felt like he didn't want to ever see me again. I called this guy today and he told me that he talked to his boss and advised me to go with a smaller company because they are a big construction company and that they do not deal with such small jobs! Can you say rude and arrogant?
We agreed that he'll create a list of the things he can do for $18,000 and see where we go from there. I am not sure where this is going to turn out since "$18,000" doesn't seem to be "enough" for them...they are charging me $275 to install a garbage disposal when they only cost $75...Just wanted to give you an idea of how inflated contractors prices are!
I talked to my loan officer to get an update on my loan and he said that escrow will officially be opened tomorrow. I was always under the impression that escrow was opened when they received my earnest money and contract, but I guess that's not the case. So much for paying "overnight standard" to mail out my EMC two weeks ago.
Something new I also learned is that termites need to be included in the bid with a 203k loan! At least Section 1 does. Section One contains items where visible evidence of active infestation (termites, beetles, etc.) or infection (wood decay fungi) were found. Termite report that was paid by seller ($75) shows a total of $4,600 for section one! $2,700 for chemicals and $1,900 for wood damage! Isn't this fantastic? Not only was $18k not enough to cover all expenses, but now I have to worry about termite clearance too?
I now understand why so many people rather rent than buy a house! It's expensive buying a house! But I will enjoy all the tax deductions throughout the years and the large cost basis whenever I do sell. I can either come out of my pocket for all of these repairs or finance everything, which I'm going to HAVE to do! I am going to increase my $18,000 budget to whatever it needs to be in order to pay for all the repairs needed in this house. But I'll tell you this, if I have to increase my budget, I don't want to have to do anything myself afterwards, like painting etc. I want it to be move-in ready!
Also, if you are thinking of getting a 203k loan, be advised that you need city permits for ALL repairs requiring a permit. Contractor will need to schedule a city inspection and good luck getting a nice inspector if you have illegal additions.
At the end of it all, this house doesn't feel like a "great deal" considering all the word it requires, but this might be the case for the majority of REO homes.