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203K And Nightmare Customers

 
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Old 07-03-2014, 04:32 PM   #21
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Re: 203K And Nightmare Customers


So lets be real, you know how much theyre under budget and you dont want to give it to them. How much is it? 3500$? The legal fees to fight them will be at least that.

You dont have to show them every receipt. You do have to show them receipts for any allowance items. Other wise why would there be an allowance?
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Old 07-03-2014, 04:36 PM   #22
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Re: 203K And Nightmare Customers


Is it an allowance or not? How is worded in your contract? If not, you should of called out model #s and brands in your scope.
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Old 07-03-2014, 05:13 PM   #23
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Re: 203K And Nightmare Customers


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Originally Posted by Metro M & L View Post
So lets be real, you know how much theyre under budget and you dont want to give it to them. How much is it? 3500$? The legal fees to fight them will be at least that.

You dont have to show them every receipt. You do have to show them receipts for any allowance items. Other wise why would there be an allowance?
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

In my opinion/experience, Metro sure sounds like a likely Judge would ..

Good luck... I think you're going to need alot of it.


PS: Why don't you pick up the phone, quit wasting time/worry/research, and call the HUD rep and the Mortgage Rep and ask them on what basis they assert the savings go to your customer.
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Old 07-03-2014, 05:21 PM   #24
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Re: 203K And Nightmare Customers


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Is it an allowance or not? How is worded in your contract? If not, you should of called out model #s and brands in your scope.
As JAWS says ^^^^^^^^, why don't you tell us what your contract calls out/says.......

It does sorta sound like you are fishing for some justification to profiteer off your clients responsible efforts to contain cost.

I wonder what they would write on here.

Sorry.....Just honest opinion/appearance to me.

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Old 07-03-2014, 08:07 PM   #25
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Re: 203K And Nightmare Customers


Believe me, we have talked to the HUD consultant and the mortgage lady. The HUD consultant said again this evening that he will sign off on the full amount, no matter what they say their savings are. The mortgage lady doesn't seem to know what is going on. She is really nice, but not very informed. Talking to them does nothing. The homeowners don't listen to anything anyone says.

Make judgements all you want, but you don't know the whole story. There is more to it than I could ever type here, but here are a couple of the issues...

The homeowner has screwed us out of plenty of money. He has violated the contract 3 times. First, he hired an HVAC company that charged $2200 more than the bid we had. This was at the very beginning of the project, so we were lenient with him (yes, OUR mistake!) because he is new to the whole process. He felt bad and agreed to cut money from another part of the bid to make up for it. When it came time for that, he wouldn't do it. The other 2 violations are about delaying payment. He has caused us to be 3 weeks behind schedule because he cancelled inspections for no reason (HUD inspector agreed there was no reason to cancel.) So I think you can see why we are not willing to give them savings that are not theirs. And if you read my other comments you'll see that he's not ONLY trying to take savings on some of the stuff they were allowed to pick out, but also other things that were not negotiable. And a lot of things they say are savings are NOT savings. They are looking at the wrong items #s at Lowe's or just remembering the prices wrong. They want to see all of our receipts and go through them line by line. They have NO IDEA what a daunting task this would be. Even if I gave them receipts, you can't always tell exactly what each item is due to the way they abbreviate items on receipts.

We are considering talking to our attorney about getting out of the contract because of these violations. The only reason we don't want to is because we don't like leaving things undone. We don't want someone else to go in & finish it and have our name associated with something we didn't do. Who knows who they'd get to finish and who knows what it would look like. We take pride in doing things the right way.

Please don't accuse us of profiteering from our customers. If anything, we cut them too many deals. We are a small operation and my husband doesn't really do this for the money. He loves this kind of work and he is good at what he does. When his customers are happy, he is happy. Right now, nobody is happy. lol
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Old 07-03-2014, 10:11 PM   #26
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Re: 203K And Nightmare Customers


Whoa, whoa, whoa....I'm still pretty much with ya, but you kinda crossed a line......

Everybody works for money. There's no shame in that, and people need to quit thinking that making money and the word "profit" are bad things and should never be mentioned.........

Now your husband may love doing this kind of work, and he may not do it ONLY for money, but to say he "don't really do it for the money" is just silly.

I hope you can find your way out of this mess. Your attorney will (should) know the whole story and should be able to guide you in the best direction.
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Old 07-04-2014, 02:40 AM   #27
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Re: 203K And Nightmare Customers


I don't trade dollars with customers. Everything I buy is wholesale even if it is bought at a retail store. I mark it up and sell it at my retail . If I or my money touches it it gets marked up
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Old 07-04-2014, 03:05 AM   #28
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Re: 203K And Nightmare Customers


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Originally Posted by Five Arrows View Post
I don't trade dollars with customers. Everything I buy is wholesale even if it is bought at a retail store. I mark it up and sell it at my retail . If I or my money touches it it gets marked up
Fair enough to it's how we do it to if we didn't charge out rate would have to be alot higher
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Old 07-04-2014, 03:25 AM   #29
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Re: 203K And Nightmare Customers


Give them a receipt from your company and say this is what I charge, doesn't matter what Lowes charges, doesn't even matter what the company charged that you bought it from. "This is what I charge so pay up". Make damn sure it equals, to the penny the exact contract amount.

All you have to do is give them reciepts. How far can they go? What keeps them from asking Lowes for the receipts for what they got the stuff for? Your wholesale prices are proprietary just like Lowes.
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Old 07-04-2014, 07:01 AM   #30
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Re: 203K And Nightmare Customers


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Is it an allowance or not? How is worded in your contract? If not, you should of called out model #s and brands in your scope.

I'm quoting the above because I believe that's the key problem the OP is having.

I did some research on the 203K Rehab loan and this is my take.

The contractor must submit a detailed estimate to the bank on all repairs. I'm assuming part of that detailed estimate has all materials, appliances, fixtures, etc.. listed with a cost.

This is where I believe the OP dropped the ball. As mentioned above (Jaws) there should have been detailed descriptions for each item in the estimate, e.g. Manufacture, Model number, Color, Style, Finish etc..

If there where just generic names, Refrigerator, kitchen sink, bathroom sink, etc.. you have to take a step back and look through the eyes of the owner WHO entered into the 203K Rehab Loan with full knowledge they can KEEP their SAVINGS and had every intention of doing just that.

Now all is not lost. You are entitled to cover your costs along with profit. Just because the sinks actual cost was $232.16 including tax doesn't mean you can not mark it up to cover your time to make the purchase, pick-up drop off at project site plus profit.
No one will deny the fact that the sink, 2x, flooring etc. "materialized" on the project site on its own. It got there with a cost.

As Californiadecks mentioned, go through each receipt for each item and mark it up your usual percentage. (don't get smart and go above your norm, be honest about it) If there is a savings after your mark up then refund that amount.

Next time you list material that is an unknown price wise because owner needs to make the selection you must make it an allowance and explain exactly how allowances are handled.
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Old 07-04-2014, 08:06 AM   #31
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Re: 203K And Nightmare Customers


Did they remove items, like skylights, ez close doors, granite?

Removing items should be issued a credit, switching to home depot faucets and toilets shouldnt have any bearing on the price. Would you honor a warranty on a product that wasnt in the original scope when it was replaced with a poor quality one? Did using a different product require your husband to make a special trip to pick them up at any time, or delay the job at all?

It seems they already caused delays and problems, that costs money. No refunds.
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Old 07-04-2014, 09:22 AM   #32
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Re: 203K And Nightmare Customers


Somethings really wrong with this. I remodeled 20 or more houses with 203k loans. The contracts are set in stone from the beginning. I doubt refunds could work in to play even with allowances. Due to the structure of these loans I specified everything that is used. Customers are warned by the consultant about not being able to change anything during construction and work out all details with contractor before signing the dotted line.
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Old 07-04-2014, 09:43 AM   #33
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Re: 203K And Nightmare Customers


You may also have some room based on your contract if they changed items out from what you had listed to change the cost of the installation as well. While it is very easy to choose a different set of fixtures if you can in any way show that it increased difficulty of the installation then by changing out the products you specified a price for using then they made that switch and entitles you to charge differently. as an amendment as well. While it is nit picky - so is what they are doing and they are the ones that changed the contract as soon as they chose a different brand or model or product style than was originally quoted.

Also - I would dispute they have a right to your cost receipts because as a business you are completely entitled to make a profit on the "parts" you sell as well. Just because you get a contractor discount does not mean you have to pass the savings on to the customer. While they are entitled to a completely itemized bill, unless you are contracted for just the labor and the customer to supply the material then the cost of the material is whatever you say it is. If you were with them at home depot that is how you are paid for your time to do the shopping with them.

I agree - have a lien process waiting as soon as their is an argument that is not easily settled.
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Old 07-04-2014, 10:31 AM   #34
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Re: 203K And Nightmare Customers


Quote:
Originally Posted by SolidHomes View Post

Make judgements all you want, but you don't know the whole story. There is more to it than I could ever type here, but here are a couple of the issues...

They are looking at the wrong items #s at Lowe's or just remembering the prices wrong. They want to see all of our receipts and go through them line by line. They have NO IDEA what a daunting task this would be. Even if I gave them receipts, you can't always tell exactly what each item is due to the way they abbreviate items on receipts.
There are three sides to every story, your side, their side and the truth. Right now we are getting only your side and who knows if that is the truth.

If they want to see the receipts, then sit down figure out how long it will take to produce them, multiply that by what you feel is a good price and tell them it will cost x to produce it all.
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Old 07-04-2014, 10:38 AM   #35
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Re: 203K And Nightmare Customers


I have an arbitration clause in my contract.

In the event of a dispute either party may choose to enter into arbitration with an arbitator of my choosing.

There's no solving this one without appeal to a highe authority, loan officer, judge, mediator etc. The question now is which one will be most suitable to you achieving your goals.
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Old 07-04-2014, 12:05 PM   #36
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Re: 203K And Nightmare Customers


jproffer - Let me clarify a little bit. Of course he's in it to make money...that's how our family eats! But my point is, even if he had a different "JOB" he would still be doing construction projects on the side because he just loves doing it. I am not saying that making a profit is a bad thing. You can't keep your company going without a profit. BUT...he is not "hung up" on money and making people happy is more of a motivation for him. I'm always the one pressing him to charge more. After this headache of a job, I think he finally agrees.

ranteso - You are correct. The way we did the bid was our first mistake and we've known that from the very beginning. This is not our normal procedure and trust me, we won't do it that way again. We are not trying to make a profit on the materials. If I mark things up 10% for our time, etc, there won't be much "savings" left for them at all. And I know they are not going to agree to the mark up. They are literally nitpicking every penny.

JBM - They haven't removed anything other than a pendant light, a pocket door and 1 pedestal sink. We are perfectly happy to remove those items from their bill. The rest of the changes are just different model #s from Lowe's, not a huge difference. But they are trying to get .09/sq ft on all of their laminate flooring. That one adds up to about $102. Normally we would just eat this cost, but it's 20+ things like this and it is really adding up. Plus the $2200 he owes for HVAC. I'm just not willing to give him any more until he is willing to pay what he owes.

Shellbuilder - part of the problem started with the original HUD consultant. He was incompetent as far as the whole 203K process. We had never done one before, so we were trying to follow his lead, but he wasn't really leading us anywhere. He fell ill before the 2nd draw, so we were assigned a new consultant. This one knows what's going on and was appauled by the way the first on did things. None of us were ever told about them not being able to change anything. We are going to chaulk this up as a HUGE learning experience. We've been told we are the only 203K contractor in the area, and the consultant said he would recommend us, so we open to doing more of these. We are just going to be WAY more careful next time.

Reuben D - This is a big part of the issue. They know we got some of the supplies at "wholesale" and they want to see the receipts to see exactly how much we paid and they don't want to pay a penny more than we did. We have given them MANY itemized bills...it's not good enough for them. They want to see our actual receipts.

Sector Security - Yes, there are 3 sides to every story. But the inspector is on our side. Their mortgage lady is annoyed with them. Seems to me that their side of the story isn't a very positive one. I've tried telling them that our time is money and if they want receipts there will be a charge for that time. They won't go for it.

Metrol M & L - There is an arbitration clause in the contract. We don't want to go that route (yet) because that will take time and we really just want to get this job out of our hair. That being said, we also are not going to let them get all of the savings they are trying to claim...simply because they "think" they know what we paid for things. Like I said, I am talking about EVERYTHING on the bid. Not just the sinks, light fixtures, etc.
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Old 07-04-2014, 02:11 PM   #37
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Re: 203K And Nightmare Customers


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There are three sides to every story, your side, their side and the truth. Right now we are getting only your side and who knows if that is the truth.
.
I really do not mean to not take your side...... but clearly there are questionable issues here.

We are several pages into this, and you have not disclosed what your contract provides..... PRETTY ****ing BASIC.

And it seems everything is somebody else's fault (maybe).

Why did you let them hire an HVAC company... and if they did, let them pay them.

Delays were all someone else's fault.

The mortgage lady and original HUD know nothing, and can't tell you why they think you owe any savings on allowances. But the new HUD guy loves you and will pay you.... so what's the problem....cash the check and let the HO's sue you if they don't like it..

You are not interested in the money/profit, but don't want to rebate $102 in flooring allowance.

DEPENDENT ON YOUR CONTRACT, accounting may or may not be your responsibility obligation. If it is, do you have a record system. Maybe just provide it to them...or let them figure it out... take all your receipts... xerox them.... and put them in a big green garbage bag and let them figure it out. Heck, you could have done that. (You don't have anything to hide do you).

IF it is not your obligation, tell them that.

When parties disagree,(which clearly appears to be at issue) arbitration is a pretty efficient, low cost, quick resolution. If things are as bad and one sided as you represent, I would think you would welcome it..... done in a week.

IT DEPENDS ON YOUR CONTRACT... THIS IS BASIC....

I'm sorry friend, but something does not sound Kosher as Xmas here.

Still.... Good luck.... as I wasn't there and I do not know.
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Old 07-04-2014, 02:13 PM   #38
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Re: 203K And Nightmare Customers


So let me understand, you gave them a bill that went something like sink: 200$, toilet: 150$, shower 250$, and now they are trying to say well we could have bought a sink for 100, toilet for 90, and shower for 150?

Or are you saying you billed for the initial sink, toilet and shower, then they picked out different ones from lowes, which you installed and want the price difference?

If you let them to go lowes, pick things out and installed it and its different from your initial cost estimate, I say this is your fault for allowing it and it should have been discussed before hand how the price difference would be handled.
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Old 07-04-2014, 02:33 PM   #39
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Re: 203K And Nightmare Customers


how much are they asking off? what % of the project? were things under budget??

it may be easier to negotiate with them rather than lien the property....are we talking $5k or $50k?

cheap customers are never good customers....never met a good/cheap customer.... if you knew they were going to be frugal/cheap you may have been better off to pass on the job....
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Old 07-04-2014, 02:38 PM   #40
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Re: 203K And Nightmare Customers


Quite frankly, If I contracted out my home build, with provision for allowances for items of discretion/ choice, (pretty normal), and I went shopping to try and contain costs below those allowances, I would expect those savings to accrue to me.

Would not you two feel the same way.

I will say that before I did so, I would make sure my contract provided for that.

THE CONTRACT... WHAT DOES IT SAY.

Don't cloud the issue with other contractural issues, take them one at a time, a JUDGE will.

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