Understanding FHA(k) loan..Part Three

Mortgage and Lending with C2 Financial NMLS #279125

Understanding the FHA 203(k)......Part Three


Marketing the opportunity


In my previous segments I discussed exactly what the FHA 203(k) loan is and the specifics of the underwriting and process of working with a client utilizing the product.  This segment is focused on the "how to" generate and market business using the FHA 203(k) program.  There are many opportunities and I believe they all start with having a "vision" for the perfect version of any particular home.


Listing Agents


Every listing agent has either listed or previewed at least one "ugly baby" house.  And, in Real Estate marketing school we all learn the words  to describe our "ugly baby":  "charming", "cottage", "unique", "cosmetic touches needed", "fixer" and on and on......and, the words are used so consistently that the mere sight of the word "charming" strikes terror is the heart of buyers agents and buyers alike.  Somehow, most "charming" homes are anything but charming.


Instead of marketing the home as a fixer, hope about marketing the homes potential....essentially the FHA 203(k) program allows a buyer to customize their new home purchase.  Anything as minor as updating appliances to a complete renovation of the home can be accomplished through the program.  


Consider having a contractor or architect do a preliminary sketch of a couple versions for the renovation.  Most will do this service for little or no fee for the opportunity to provide the construction or design services.  Many people simply do not the vision to see the completed project after a wall is removed or the kitchen is renovated.  Helping the buying public (and their agents) see the homes potential is crucial......showing them the financing path is invaluable.


Alternatively, you may know potential future listings that would benefit greatly by doing a 203(k) refinance prior to listing to reap the increased value in the sales price.  Instead of selling or listing the "ugly baby", it may make sense do the renovation prior to listing. 


In any case, educating the sellers of an additional avenue for financing can be very valuable, particularly because very few agents are knowledgeable about the product.  Everyone wants to "customize" their home, most think it is an opportunity only for the wealthy...selling the opportunity to customize is spot on marketing for your sellers.


Buyer's Agent


I have to suspect that every buyer's agent would love to earn a dollar for every "except" they have heard when viewing properties with their perspective buyers.  The conversation goes something like "I really like this house......except the kitchen", "except the master bedroom", "except the appliances", "except, except, except........" and the list goes on. 


Create the opportunity that exists in "imagine" house hunting.  Quite searching for the perfect house and focus on showing the most discriminating buyer how they can have exactly what they want and how they want it.  Collaborate with a home inspector or contractor to do a "what if" walk through on the property.


Consider doing seminars on the advantages of the FHA 203(k) program....nothing tells a consumer more about you than sharing knowledge and opportunity.  Consumers really know nothing of this program and, in a market of distressed sales and foreclosures, the FHA 203(k) offers opportunity where there appears there is none.


Refinance your way into positive equity


This is probably the most unique way for consumers to regain lost equity and potentially avoid the necessity of a short sale.  Underwater on an under improved home?  Consider a FHA 203(k) loan to bring your home up to the expectant standards, increase your value and sell at a profit..........instead of selling at a loss and damaging your credit for a considerable period of time.




Essentially, working with the FHA 203(k) loan requires VISION........and an absolute understanding that the vast majority of buyers, sellers, listing and buying agents do not possess the skills to see the "after" view of a property.  The proliferation of the staging industry should be enough to convince even the most optimistic that the average person only sees what they see and cannot wrap their thoughts around the potential.  Anyone wanting to be successful working the FHA 203(k) program must be able to focus on the "what if" potential of the subject property.







Posted by

Become a Fan!!  Copyscape

All content protected by copywrite and may not be copied, in part or in whole, without the express written consent of the author.  Reblogging with proper authorship credit is allowable.

Deborah "Dee Dee" Garvin

NMLS #279125



If you are looking for answers and creativity to accomplish your home buying goals and financial stability, contact me for a thorough analysis of your current and future home buying and refinance opportunities.  FHA, VA, renovation expert, HUD Certified First Time Homebuyer Certified Mortgage Banker.

(619) 906-6288


Comments (6)

Jane Peters
Home Jane Realty - Los Angeles, CA
Los Angeles real estate concierge services

Who knew you could get an FHA 203(k) refi.  But stupid question, how do you get that loan when you are already underwater? Would love to learn more about this because it IS an excellent marketing tool.

Sep 01, 2010 02:05 PM
Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices


This is interesting. I am afraid more theoretically for now as Jane noted. BTW, you are writing blogs that are feature worthy. This is simply remarkable.

Sep 01, 2010 03:22 PM
Leslie Ebersole
Swanepoel T3 Group - Saint Charles, IL
I help brokers build businesses they love.

Jon and Jane are extraordinarily good at this and they are lobbing the testimonials. I assume we're 3 for 3 on suggests. You should find a way to package this for consumers and agents. I'll design the labeling and run the call center :-).

The ugly baby story is so hard to package and sell as a listing agent. For two years I have begged, and I mean really begged, different LOs to get an FHA appraiser out to certain listings and write up what needs to be done to make the house FHA worthy. I have strong armed and persuaded contractors to give me 'ballpark" estimates on my ugly babies so that I can promote an FHA 203K. Not one LO has bit...bitten....whatever. I can't guarantee the LO would get the loan, but for goodness sakes, where is the vision? Every single listing I take is a leap of faith. Every buyer I put in the car is a risk. Why wouldn't an LO use this as a great promotion opportunity?

Another great post.




Sep 01, 2010 04:53 PM
Deborah "Dee Dee" Garvin
C2 Financial - San Diego, CA
C2 Financial

Jane,  The key is in the planning...and just how far the property is under water.  For example, an agent here is San Diego has a property listed as a fixer for 475K and thinks the property will be worth 575K after rehab of kitchen, baths and flooring.  If the seller would have done a 203(k) prior to listing he/she could take advantage of the improved equity in the sale in lieu of selling at a loss. 

Of course, this would not work on all properties....but it is an option for many.  The key is working with competent people throughout the process and ensuring the consumer knows "where" to put the money for maximum gain of equity.

Jon,  Thank you so much...you know how much I respect your writing skills...I appreciate your compliment very much.

Leslie,  Thanks a bunch, lady.  I am as amazed as you are about LO's running from this product.  Yes, they are time consuming and, yes, you have to know what you are doing...but they are rewarding and can really provide benefit to the agent and consumer.  And, they are more lucrative than a traditional loan....straight up, I would not do one for less than 2 points.  Under the heading of pay me or trade me!  LOL!

I promise I will create a consumer version of this product and will be happy to share with you.  Perhaps you could get a housing inspector to provide the services of the reluctant contractors...you think contractors would jump on the opportunity in today's market.

Sep 02, 2010 03:32 AM
Stephanie Reynolds
Integrity First Financial Group, Inc. - Santee, CA
East County San Diego Homes 619-838-4408

Deborah, next listing I have that would fall into this program, you and I will team up and market the heck out of this thing. Great, creative marketing strategy! Hey, "creative" financing is not dead!

Sep 02, 2010 01:39 PM
Deborah "Dee Dee" Garvin
C2 Financial - San Diego, CA
C2 Financial

Stephanie,  No, it is not!  In fact, creative is more important now than ever.  I very much look forward to working with you, woman!  And, the world will rock!!  LOL!

Sep 02, 2010 01:48 PM