Estimating Renovation Cost During Escrow

4 Replies

I just placed an offer on a SFR. It will be owner occupied. It will be a major rehab and I will be doing additions to the house. I am currently prequalified for a rehab loan (homestyle) and the bank needs to know renovation cost to determine loan value. I am not sure how to estimate renovation cost as I/GC will need architectural drawing to determine SOW. How should I handle this situation? Do people usually get architectural drawing during escrow? Can I get a reasonable estimate from GC before architectural drawing is completed?

@Jay Thomas - A good contractor should be able to give you a ballpark. But my guess is he doesn't want to be held to a SOW that doesn't include everything the architect puts in. Depending on how long your due diligence period is, you might have to get plans drawn up and get a full SOW from the contractor to satisfy the loan requirements. 

A lot will depend on your lender and the program as well. Some hard money folks don't really care about each line item on the budget as long as you end up fairly close to the estimated total. 

I'm an architect and also have build. If the addition and renovation is simple enough, then yes your GC should be able to give you a good estimate. However, architect drawings are a very important to have as part of your contract documents with your GC. Without drawings you don't have a baseline to bid from or control change orders. I would say get the drawings, it's an additional layer of protection against cost increases on the construction side.  

@Andrew Kerr @Seth Holmen Thanks for your response. I would love to get the drawings during escrow to get a better estimate but I'm afraid the architectural fee would be a lost cause if the deal fell through. 

The next best thing, if you don't want to invest in drawings this early, is to write out a detailed scope of work that your contractor can bid off of. Go through the CSI construction divisions and detail out each category with estimated scope of work. Include estimated sq ft numbers and estimated dimensions for the different areas. This will get you a lot closer to an accurate number before you have drawings. 

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