Demanding or Practical: Listing Agents Asking For FHA 203k Loan Offers Only
Search any regional Multiple Listing Service using the keyword "203k" or "FHA 203k Loan" and you will find scores of homes listed for sale that need work. Listing Agents now recognize the benefits to disclosing a properties condition that may result in less showings but an overall higher quality prospect since proper buyer expectations are established upfront.
The Listing Agent for these types of properties know that perspective home buyers are value oriented and will make offers based on needing a repair budget to fix the house post-settlement. While the offers will be less than what would be expected for a house in move-in condition the Listing Agent won't have to deal with back-and-forth negotiations over making repairs required by the appraisal report.
A common myth regarding the FHA 203k loan is that the loan takes longer to process than a standard FHA or conforming loan. While this is often the case consider the alternative. If the house needs work why market the house to home buyers whose expectations are not in sync with the condition of the house. If the house doesn't sell, the Listing Agent will have to deal with Seller frustration and the chance of losing a listing.
Or maybe the house does go under contract. What happens when the appraiser inspects the house and provides in the appraisal report a value "subject to" a long list of FHA mandated repairs. Now the loan approval process gets bogged down while negotiations occur over what items are to be fixed, who will pay for the repairs, contractor bids being requested by the seller, and after the work is done dealing with more costly mandatory re-inspections and certifications (i.e. roof certification, dry basement certification, mold test, etc.).
If the property condition is distressed a Listing Agent may want to consider streamlining the FHA203k loan process by having a FHA 203k Consultant provide a feasibility report that can be left at the house along with the listing flier. The FHA 203k Consultant is trained on identifying deficiencies in the property that are out of scope with FHA guidelines and will provide an estimated cost to repair these deficiencies. The cost of the report is around $200. By having this report available, perspective home buyers will know what repairs are needed upfront and can make an offer based on the estimated cost of these repairs.
To learn more about your financing options through the FHA 203k Renovation Loan Program complete a contact form or call (866) 747-2882 to speak to your Nationwide FHA 203k Renovation Loan Experts.
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