Writing an offer with 203k financing in Oakland Alameda, San Francisco

By
Mortgage and Lending with Caliber Home Loans NMLS# 242952

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Oakland Ca., It’s no secret we’ve discussed this before, there are some properties on the market with deferred maintenance right? Well it can be tricky for first time buyers to get into these well priced properties due to financing restrictions. That’s why more and more we are seeing 203K offers when necessary, a loan that actually allows you to finance the construction of the property after the close of escrow. Now the big questions is “How do you write an offer on a 203K property?”

Step 1

Put 203K in the Purchase Contract – Now this is not legal advice on how to write a purchase contract, however a good rule of thumb would be to fill out your contract like you would a normal FHA contract and then write in “203K renovation for FHA”.

Step 2

Provide for Longer Contingency Periods – A 203K takes a little bit of time, allow for enough time to get the Home Inspection AND a Contractor Bid with the HUID consultant present. Then, once construction is finalized we can submit to underwriting and order appraisal.

Step 3

Provide Longer Appraisal Contingency than You Are Used To – 203K Appraisals are based on future appraised value. You have to have the HUD consultant work write up and construction costs figured out FIRST before we can even order the Appraisal let alone inspect the property.

Step 4

Give 60 Days to Get it Closed – 203K Loans have more 3rd party items so give some additional time to get a couple contractors to the house AND give the contractors time to price accurately and get the file properly underwritten. Now that you know how to write a 203K contract you need to be able to sell the offer. To do that educate the listing agent on the fact that condition is a non-issue. All the repairs the property needs will be taken into account early on and there is rarely a value issue on these loans.

For more information email info@garrick.biz or call or text 510.846.3006.

Related Articles:

 203K and Sewer Lateral Repairs

 The Truth About 203K Financing

 203K Streamline vs. Full    

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