From the Desk of a Broker

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Cost to Repair a Property

Published February 11th, 2012

While mortgage lenders are scrambling to make sense of their inventory of non-performing real estate assets, REO property, foreclosures and they like, one company is trying to help them. It’s called Bluebook International (www.bluebook.net) and they offer a very unique service. It is a cost-to-repair tool. What is the “Cost to Repair” a property? It’s a question that is often asked but not well answered. 

All too often, buyers naively go into a real estate transaction not knowing the condition of the property. I consider myself a relatively experienced property buyer and recently wished I’d had this service available to me. Various plumbing and drywall repairs cost me an additional $2,200 because I was unaware of a plumbing problem even though there was in inspection. It leaked, drywall had to be replaced and finished and painted and it came out of my pocket. The problem was that the water had to run for about 10 minutes for the problem to be exposed. All it took was a tenant enjoying a nice shower and Bang! $2,200. So, rather than being able to make a realistic estimate based on local material and construction costs, I probably over paid for a fast solution. 

When lenders and buyers know the cost to repair and are willing to negotiate, the new market value is reformulated (Appraisal or BPO minus the Cost to Repair) or somewhere in between those two prices. Through a series of about 20 questions, Bluebook can very closely approximate the cost to repair issues that may exist with a home. Knowing local labor and material costs along with demolition fees helps the company dial-in of these cost to repair item. Bluebook knows those costs and that invites better disclosure. Full transparency makes for a smoother transaction and a better feeling for both the buyer and seller as well as the broker involved. In addition, it is likely that fewer legal actions will take place due to the upfront disclosure issues being handled. Contact Bluebook for more information on Cost to Repair.