This article was sent to me by an Inspector/Appraiser/Pest Control Professional. Will gladly
provide his name if you need their services(Mid State New York)
Here’s our top 5 tips for closing more 203K Rehab Loans.
1.) Purchase Contract: Include the contingency that adds a few more days. FHA 203K financing takes about 45 days to close. We need contingencies that are slightly longer than normal so we can get the inspection AND the contractor bids together.
2.) The Wish List: Start it early. Help the buyer visualize the new flooring, cabinets and trim or the other repairs they want included in the rehab. Prepare them with the fact that based on the property condition some items they want included may take back seat to mandatory repairs. Health and safety, energy efficiency and HUD’s minimum housing conditions will take top priority.
3.) Utilities: ALL utilities need to be on at the time of home inspection AND appraisal. Get them on and leave them on…until we have an appraisal that indicates functioning systems. Why? Because when a foreclosed/vacant house sits, and the systems are inactive for an extended period of time, they tend to break. To help hold down costs during the evaluation process we need functioning systems. With a 203K we can correct any issues with plumbing, electrical or HVAC, but we need to know if they are broken or not. We need utilities ON.
4.) Inspections: (Turn Key Inspections) We include the home inspection/termite. Beside your home inspection, which we all know should be standard on any purchase, FHA 203K loans often require additional inspections if the purchase contract or pre-existing conditions call for them. If the house is vacant for more than 30 days and is on septic system we’ll need a septic inspection. If the purchase contract calls for a termite inspection we need a termite letter. Do you think the foundation is stable? We can repair the foundation with 203K funds but we’ll need more than a short estimate from the foundation contractor; we’ll need an engineer’s certificate. Be aware that depending on property condition additional inspections may be required. If the home needs a lead certification, I am a EPA Lead risk Assessor. Whether your cost is below $35,000 or not, hire a HUD consultant. You’ll keep way ahead of the game and an experienced consultant will save you time and money.
5.) Stay Connected: Once the loan is closed don’t fad too far out of sight. Most buyers need help choosing colors, textures and equipment. The rehab program is similar to custom building. This is a time when the buyer, the consultant and the contractor will need to communicate in a very effective way and your help will be greatly needed and appreciated.