Understanding the Specification of Repairs (SOR)

FHA 203k Work Write-Up – Specification of Repairs (SOR)

It is imperative for the customer, Realtor and general contractor to understand the importance of the Specification of Repairs. Unlike the bid itself from the contractor, this document is attached to the appraisal report and presented to the appraiser to assist in determining the value and future value of the property, based on the work to be completed.

Staying On The Same Page

The contractor and the consultant must also be on the same page, otherwise a situation may arise where the contractor may be willing to perform work for a price that differs from what the consultant determines- the numbers can very slightly but overall we want it to be in line.

Market Value = Less Problems

A perfect example of this would be having a contractor come in with a low bid—say $20,000 instead of $30,000-which would be the “market value” of repairs.  If he were to be unable to perform the work, then the work would have to go to another qualified contractor. This new contractor should be able to complete the job within the budget allotted by the consultant, not within a budget that was originally provided by a contractor with a more attractive price. So, please be aware of any contractors like this who may be offering you a deal, when, in fact, it could be a major problem in disguise.

So keep in mind that the FHA 203k Work Write-Up, (SOR- Specification of Repairs) on the FHA 203k mortgage, based on the market value of the work to be completed, so that in the unlikely event that a particular contractor is unable to complete his work, we would be able to have a new contractor in place right away.  This is done for the protection of all parties involved in the transaction.


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