Confirming Construction Progress
Q:
The loan officer requested that I perform progress inspections on new construction after I completed a "subject to completion" appraisal for the lender client. Initially hesitant, I agreed to help because this is a good client. The loan officer explained that the builder sends payment requests with estimated completion percentages, work details, and photos. My role is to visit the job site and confirm the work has been done. I don’t have to confirm the estimated percentage of completion.
I visited the job site with the builder’s report and photos and everything looked okay. My job was to ensure the builder wasn’t sending photos from another job. I confirmed that the work seemed complete and took my own set of photos.
I feel comfortable completing these inspections for the loan officer. Are there any concerns or risks that I am overlooking?
A:
I agree that estimating percentages of completion can be very subjective, so it is good that you are not doing that. You might consider adding some language to these "reports". One thing you need to convey is that you are confirming that the work on the job site appears to be complete but that you are not a contractor or a specialist in any of the trades (electrical, plumbing, etc.) so you cannot confirm the quality of the work performed or that it conforms to all applicable building codes etc. Your "inspections" should in no way take the place of required and regular inspections by qualified professionals.
You might also wish to note that your inspections are being provided simply to advise the lender that work completed by the builder appears to have been performed as represented. Nothing you submit to the lender is to be relied upon by the borrowers or by any other third party for any purpose whatsoever. Down the road, if the borrowers claim the builder did a poor job constructing their new home, I don’t want them pointing to you and claiming that these "inspections" were done for their benefit and were somehow giving them "peace of mind" that their builder was doing a good job and building them a quality home. That is not the purpose of the report you are submitting to the lender and it is beyond your expertise as an appraiser.
Lastly, I'm glad you took your own set of photos. Just to confirm the work that was done on the dates that you inspected. We only hear about the horror stories. If the builder or if a subcontractor gets into an argument and someone rips the AC unit out and brings it to some other jobsite, I want you to have photo proof that it was there the day you inspected. You can’t be responsible for anything that might have happened after that.