If you are looking to Purchase a Property that will need Renovations you may also have a need to then partner with a Realtor. This page is designed to give you some quick pointers on what to look for and anticipate when searching & working with a Realtor on an FHA 203k transaction or any other Renovation Loan Program. Here’s some information we think will help…
Here are a few tips to help you with your search for a Realtor. If you wish to maximize your home search options then you will want to consider properties that may require some Renovations, and thus may need an FHA 203k or other Renovation Loan Program. This is not an all-inclusive list, but it’s meant to help you better assess who you will want to partner with, and who may provide some value addition to the goals you have in mind with considering Renovation Mortgage Financing options.
Note: If possible you may want to make sure you are already pre-qualified/pre-approved with a lender to help you get a better response from Realtor prospects.
- Contact a few (2-3) Buyers Agents and set up some interviews to see who you may be comfortable working with.
- Research any of their websites, online profiles, or reviews that you can find prior to meeting with them.
- Find out what they know about Distressed and/or Foreclosure Property options.
- Keep in mind that Renovation loan programs may be used for any property whether it is distressed or not.
- Find out what they think about the overall benefits of Rehabbing/Remodeling a home
- Find what they know about the FHA 203k or other Renovation Mortgage Programs if these are options you plan on considering.
- Some Agents provide wrong information as it pertains to these programs so find out upfront if you are dealing with one of those, or with someone who is willing to work to find out the correct answers for you when they don’t know an answer.
- Find out what philosophy, business model, or primary niche they operate their business based on.
- Find out if they have had any Continuing Education Training on Renovation Mortgage Programs Options like the FHA 203k Program
- Find out what they think their Strengths and Weaknesses are.
- Find out if they work with a team or if they would be assisting you directly themselves.
- Find out if they are a Part-Time or Full-Time Agent if that is something that is important to you
- Find out how familiar they are with the Market in the area, city, town, suburb, the neighborhood you plan to search for properties in.
Easing your real estate agent's concerns about renovation loans
The real estate agent’s role in a renovation transaction is mostly just like their role in a non-renovation transaction. Here are a few tips…
- Writing the Purchase Contract for a VA Renovation Loan may be slightly unique, but nothing scary at all.
- Your Realtor should plan to help you coordinate and work thru the Contractor Selection/Bid phase.
- Remember: This is an important step that is key to ordering a timely appraisal and closing on time.
- The inspection phase will be the same process with/without the need of an FHA 203k Consultant.
- Remember: The FHA 203k Consultant is not automatically required on every transaction
- The Closing Date will need to be 45-60 days. (Consult your lender)
- Once the Renovation Mortgage Closes and Funds your Realtors job is complete.
- They get paid at closing just like with a traditional transaction
- They don’t have to wait until the Renovations are completed to get paid
Misconceptions or Myths you may hear about renovation mortgage loans
Many Realtors as well as many Lenders are inexperienced when it comes to the FHA 203k or other Renovation Loan Programs and how they actually work. This means they may not immediately be aware of the true benefits to you in taking advantage of what these programs can offer. This may result in you getting bad/wrong information, or examples based on a minimal actual experience with these Programs. Don’t get discouraged if this happens as it may just be an initial indicator that they aren’t the best fit for you. Here are some misconceptions or myths you may hear to help prepare you in advance…
- These loans have a high fall out rate or never close (Ask for proof and see how they respond) – FALSE
- These loans have a lot higher out of pocket costs– (Remember: the majority of the additional fees are financed) – FALSE
- These loans have a lot higher interest rate – (Consult a Lender for specific ranges) – FALSE
- These loans don’t let you close until the Renovations are completed – FALSE
- These loans take forever to close – FALSE
- You have to close these loans multiple times – FALSE
- These loans restrict when you can move in; you can’t move in until after all Renovations are completed – FALSE
- You cant buy a house with these loans if the utilities don’t work or can’t be turned on – FALSE
- You cant buy a move-in ready house and use these Programs to do updates you still want done – FALSE
- Conventional loans don’t have Minimum Property Standard requirements (Safety, Health, and Soundness) – FALSE
- These loans require multiple appraisals (Only required on an FHA 203k Refinance) – FALSE
- This house won’t go FHA/VA you can only buy it with Cash or a Conventional Loan – FALSE
How a real estate agent can represent more buyers and get more listings
- Buyers love hearing that Realtors understand and have knowledge of multiple options available to them. It shows a level of professionalism and value add for potential clients not aware of all options available in the marketplace. If you have the basics of how the FHA 203k or other Renovation loan programs work, as well as a few lender contacts with actual experience with these programs then you have a clear competitive advantage in marketing yourself to new buyers.
- Sellers love hearing that Realtors understand all options available to strategically list their properties for sale. Cash-only sales for example typically sell at a discount as compared to transactions financed with a Mortgage. By expanding who you are able to strategically market properties to you can increase traffic, offers, and ultimately the price that your listings sell for. By highlighting the benefits of the FHA 203k or other Renovation Loan Programs to a seller you can gain a competitive advantage that other Realtors aren’t using. Expired listings that previously were only listed for sale via Cash are great targets to monitor and swoop in to save the day on.
