Thread: Draw Inspections

Question about draw inspections, can anyone explain the various types? Had a lender recently call me to do several draw inspections but he didn't have any idea what he wanted me to inspect. The lender said he didn't have any specific form he wanted filled out, nor did he require photos. He just wanted me to go to the site and see if the roofing materials were there. He was offering $150.00 per draw inspection and expected at least eight draws.

I've done several in the past but usually the lender has some idea or form they want filled out with photos. I guess I don't mind driving out to the job site and saying, "yep-the trusses are on site" collect the check and call it a day. Seems a bit odd to me that's all they're looking for. Anyone have any experience with this?

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Originally Posted by Ken Larson

Question about draw inspections, can anyone explain the various types? Had a lender recently call me to do several draw inspections but he didn't have any idea what he wanted me to inspect. The lender said he didn't have any specific form he wanted filled out, nor did he require photos. He just wanted me to go to the site and see if the roofing materials were there. He was offering $150.00 per draw inspection and expected at least eight draws.

I've done several in the past but usually the lender has some idea or form they want filled out with photos. I guess I don't mind driving out to the job site and saying, "yep-the trusses are on site" collect the check and call it a day. Seems a bit odd to me that's all they're looking for. Anyone have any experience with this?

Ken: Lenders are a mixed and fickle bag, to be sure (reference the recent bank meltdown). Usually what they want is to insure that their money is not being used to visit girlfriends in South America, but rather to build what was set forth in the plans. They typically are not concerned so much about the correctness of the work, but instead are more interested in, for example, if the shingles made it from the supplier to the top of the house.

So then, in my experience, these types of inspections are more bean-counting experiences and not inspections per se. Just be sure that you carefully set forth your boundaries with the lender up front in writing. Especially where it comes to frequency and speed of payment for your services.

Originally Posted by Ken Larson

Question about draw inspections, can anyone explain the various types? Had a lender recently call me to do several draw inspections but he didn't have any idea what he wanted me to inspect. The lender said he didn't have any specific form he wanted filled out, nor did he require photos. He just wanted me to go to the site and see if the roofing materials were there. He was offering $150.00 per draw inspection and expected at least eight draws.

I've done several in the past but usually the lender has some idea or form they want filled out with photos. I guess I don't mind driving out to the job site and saying, "yep-the trusses are on site" collect the check and call it a day. Seems a bit odd to me that's all they're looking for. Anyone have any experience with this?

Commercial or Residential? Sounds like a commercial project. If it is a commercial project you need to ask for the "AIA" form. This will provide you with what the builder is requesting for this period along with historical data for the project.

For residential you need to see the itemized request from the builder that was give to the bank. What is the builder requesting? How much is the builder requesting? Is the % that is being requested equal to the amount of work that has been completed.

If they are getting ready to roof the project this would tell you that they have about a third of the project done.

When you are doing a draw inspection you are looking at quantity and not quality the majority of the time. I have had some lenders ask me to point out any glaring problems I might notice that would cause funding problems down the road.

I've only done a few DI for lenders or builders. Most of mine have been for the buyer / owner getting the rehab done. Agree completely with Aaron and Scott on the details they presented. I've found the same to be true.
Ask what standard they want you to use for the DI. Local Code, manufacturer's spec's? HI SOP isn't really appropriate as I see it.
If the client isn't weird, it should be Ok and open up other doors.

Most want to know the percentage of work complete for each of the various phases (which can get quite complex or be very simple) and want to know about material stored on-site.

Be careful when reporting material stored on-site. On one I took a photo of a tractor-trailer full of plumbing fixtures for a 'material stored on-site' draw and then the next time I wanted to confirm that the material was still stored on-site (things going on made me suspicious) and they refused to unlock and open the trailer doors, so I said I could not approve ANY work for ANY part of the draw, after the project manager ranting and raving about I will never be back out there to do another draw inspection, I left, reported what had happened and that I suspected the trailer with the plumbing fixture stored in it was now empty, I was directed to go back and verify the on-site storage with the project manager (printed out e-mail from lender) and that this draw and any future draws would depend on me inspecting that trailer.

Long story short is that I went back, the trailer was empty, everyone got really pissed off, I filed my report with the lender, they deducted the previous amount for the stored on-site materials, I signed off on it, and then was never called back.

Suited me fine as I don't like working with crooks, and I suspect the lender had to follow through because I pointed it out but the lender 'was in on it' and thus I was never called back.

Other times the contractors will try to do just enough to bump the draw into the next amount - don't give in, otherwise you will authorize the money to be paid out and then there will not be enough money to finish the project should that contractor go under.

Had several try to do that, and after holding my ground on percentages complete, in some cases they completed the work for the next draw and in a few others the contractor just walked away from the job.

Always make sure you do not over approve an amount for a draw.

Watch your back.

No one else is, and the contractors (especially in this economy) will get as much as quickly as possible, then if then cannot finish the job, you are left with having approved more than was done and there is no enough left to have another contractor finish the project.

I was almost in that spot once, so I started approving less and less each draw until the contractor was frantic, I told him that now the percentage of work complete and the draws approved now just barely left enough to complete the percentage of work NOT complete if he were to walk away - he got the message and finished the job in short order and then completed the draws.

I used to charge $350 for those draw inspections. They said they would pay $xxx, I said I don't leave the office for less than $350, so they agreed to $350. If you do a proper and complete draw inspection with percentages complete, etc., photos and other documentation, it is worth MORE THAN $350 each draw inspection, and they know that.

A few years back I had a 300 unit apartment complex that was being rehabbed. I had the draw contract for the project, it was a very profitable gig!

Caught the GC red handed taking product from this site to another project that his brother was building. The bank wanted me to inspect each unit for WH, dishwashers, and front doors. Very specific on what they wanted inspected, apparently they had an idea that something funny was going on.

The first 50 units or so went very smooth with no problems. When I got to the third building, I noticed a large amount of workers. My camera battery died so I had to go to my truck and get a new one. My truck was back at the office by the first building. While I was walking back to my truck I noticed that all of the front doors were missing from the first building. So I went back and just took a look by myself. The doors were gone along with the dishwashers!

When I got back to the point that I stopped I did not say anything. I finished the units in that building and I then said that I wanted to go to building number 6. I started to walk that way and you would have thought that I had just committed a crime. The GC came wheeling up and said that I need to go in order. I said OK, and just ignored him. I walked over to the last building and it had no doors or dishwashers! I walked over to building #5 and it had doors and dishwashers. I then walked back to building #1 and it had no doors or dishwashers.

The GC had removed the doors and dishwashers after I had done the inspections. He then had his little army move them to the units ahead of me and install them!

All I did was take as many pictures as I could and quickly got in my truck and left. I called the bank. They intern called the local police and pressed theft charges against the guy.

SP: Sort of a rolling rip off thing. Wow.

There are all kinds of things to count at the site. There are also all kinds of crooks at the site. This is a part that bothers me a lot that people are getting paid to do a job and then they try to take advantage and rip people off. They shouldn't wonder why they don't get the next job. They just makes it harder on themselves to make a living when they are taking such a chance on breaking the law. (Sorry I can't get the underline off.)
Lee W.
Refrigerator filter

Just for my curiousity how are/did you getting most of your draw inspections? Do you go straight to lenders or banking institutions and supply paper information? Email, direct mail etc? As we are approaching the winter months I am ramping up my marketing efforts and would really like to start getting more into draw inspections. Any input or experience would be greatly appreciated. Thanks gentleman!