I found an old house (1950) that I love! Who should I call 1st to find out what needs fixing & the cost? An inspector, appraiser, contractor or

Asked by Lela, Alabama Thu Aug 25, 2011

who? I don't want to get in over my head in renovations. I also don't want to spend too much money fixing up the house if its not in my best interest. The house is a foreclosure and is sold as-is. I am considering a 203K loan to get the renovations done. I want to get the house at a cheaper price than listed after I find out the cost of the renovations. I am not sure at the moment what price is too much. I'm EXCITED but CONFUSED.

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HomeswithGladys’ answer
HomeswithGla…, Agent, Birmingham, AL
Fri Aug 26, 2011
Lela, anytime you find a home of your dreams is a great feeling...but you must remember that in order to purchase you have to contact the owner to find out if its for sale. You also can do this with a Local Realtor. The Realtor of choice will then do the necessary research about the property and they will contact the seller.
Are you paying Cash for the home, or will it be a Conventional or FHA purhcase? What does the lender require?...
Once contact has been made and you all talk about the purchase price and agree, you then need to seek a reputable inspector. The seller could have a pre-inspection already but most don't, this will let you know what's wrong with the property!
As mentioned below the Lender will then send out an appraiser.
And once allproblems have been discussed and or agreeded upon between both parties
thats when you should get the Contractor out!
Hope this helps!
2 votes
Heather Speed, Agent, Northport, AL
Thu Aug 25, 2011
BEST ANSWER
The first step is to talk to your lender to find out the cost of purchasing the house & if they offer 203K loans (a lot of local banks do not here in Tuscaloosa). The lender will also be able to explain to you the process of a 203K loan and let you know if the house qualifies. If 203K is not an option, funding a foreclosure with lots of repairs, may be an issue.

Secondly I would talk to a REALTOR and ask them to pull up a CMA of the area so you know what you are dealing with before spending any money. After you decide that the house is worth the price, you can make an offer & proceed with a reputable home inspector. This will costs you around $300 more or less depending on the size of the house. The home inspector will walk you through the house & provide you with a summary of repairs. After reviewing the report, you can decide what contractors you need to contact.

It is always good to have buyer representation, someone looking out for your best interest, during this process. If you need any assistance or want to discuss this more, please feel free to contact me (this does not cost you anything). I also know a bank in town that is/was doing 203K loans if you need help.

Best of luck on your decision! I know this is a very exciting time!
2 votes
Liz Spiller, Agent, McCalla, AL
Fri Aug 26, 2011
Lela,
If you are seriously interested in purchasing this or any home you should choose a realtor to help you through the process. A Realtor has the knowledge to help you with the negotiations, find an inspector as well as helping you find a mortgage company that does the 203K renovation; not all mortgage companies do them.
2 votes
Kim Bohannon, Agent, Tuscaloosa, AL
Fri Aug 26, 2011
Lela, Congratulations on finding a home!! This is one of the biggest investments of your life and although it is exciting, it can be a little scary. That's why the 1st thing you should do is to have a REALTOR who represents your best interest and can advise you
throughout the process.
Before, you make an offer, I think the least expensive thing you could do
is to meet with a LICENSED Contractor at the home. A good licensed contractor can give you a
good overview of necessary repairs and the cost. Most give free estimates.
Another option, if time is of the essence, and you don't want to loose
the home to another buyer, is to make an offer that contains a home inspection option. Once you have an accepted contract, you have a certain amount of time to get a home inspection done. The price is usually $300 & up. Based on size & age of home. The home inspector will be able to tell you all repairs that are needed, repairs that will be required for the loan and a general idea of the cost.
Before you make an offer, be sure to ask your lender if they can do FHA 203K loans. Not all lenders in Tuscaloosa can.
Your REALTOR can help you decide whether the amount of money you are investing in the home is wise or not.
Feel free to contact me should you need a REALTOR. I am very experienced with properties that require 203K loans in Tuscaloosa. Good luck with you decision!!
2 votes
, ,
Fri Aug 26, 2011
For a 203K, the contractor must be licensed and insured. Make sure that you confirm that upfront to save yourself a lot of time. Many are not.

Regards,
Rodney Mason, NMLS #151088
Sr Loan Officer
Prospect Mortgage
825 Juniper St NE, Atlanta, GA 30308
Office: (404) 591-2453
rodney.mason@prospectmtg.com
Apply Online at http://www.rodneymason.com
Licensed in Alabama & Georgia
Web Reference:  http://www.rodneymason.com
1 vote
, ,
Fri Aug 26, 2011
You definitely do not start with an appraiser since the lender must be the one to order the appraisal. Since the property does need work and requires a Renovation mortgage, you are probably best off starting with a HUD Consultant. They will tell you exacly what requires are required to meet minimum FHA standards. They will then give you a list of suggested repairs. You can then give a list of your desired repairs.

Normally, you would not have the HUD Consultant out unitl AFTER you are under contract. Sicne you are trying to determine an offer price after you know the repair cost, thsi would be the most effective timeline. There are very few HUD Consultants in AL though. I have included the link below.

In 2010, Prospect Mortgage was the country's #2 volume FHA 203K lender. We are one of the few 203K lenders who offer both the Streamline and the Consultant versions of the program. Most only offer the Streamline. We are also one of the few to have our own in-house draw department.

Regards,
Rodney Mason, NMLS #151088
Sr Loan Officer
Prospect Mortgage
825 Juniper St NE, Atlanta, GA 30308
Office: (404) 591-2453
rodney.mason@prospectmtg.com
Apply Online at http://www.rodneymason.com
Licensed in Alabama & Georgia
1 vote
Pacita Dimac…, Agent, Oakland, CA
Fri Aug 26, 2011
I found a property for my buyer who had limited funds. We wrote the offer based on market value and propert condition...this was with the thought that we would get an FHA 203K loan for the repair/renovations.

We recently closed on that fixer. What helped is that the FHA inspector had required 3 estimates to do the minimum work for the property to be habitable and in good condition. The buyer had a contractor take a look and submit his estimates, but the FHA inspector asked for two more. He recommended one, and the lender found another. Based on the three estimates, the FHA inspector was able to determine how much to approve.

This process also gave the buyer the information he needed on what to expect.

The appraisal wasn't done until the FHA inspector came up with his evaluation.

So start with your lender ---- find someone who is an experienced FHA 203K lender, and go from there.
1 vote
Dan Tabit, Agent, Issaquah, WA
Thu Aug 25, 2011
Lela,
I would consider a good inspector and a contractor back to back. A good inspector won't quote repair costs, but will identify serious issues and direct your contractor to some repair issues. I wouldn't hire an appraiser, but have your agent provide you with some before and after valuations based on what your inspector & contractor uncover. An appraiser will be necessary for your 203K, but they must be selected and approved by the lender, so you'll end up paying for 2 if you hire your own.
1 vote
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