New Loan Program Helping Agents
Over the past few weeks I've talked with a couple agents living and working in crazy markets. Low inventory seems to be the common theme in most markets coast to coast. The problems this is causing for real estate agents are multifold. For one, when listings sell too fast without ample marketing time it kills the opportunity for residual business to come in. Also, when there are too many buyers and not enough homes, bidding wars cause some people to just throw their hands in the air and go back to the sidelines. I've seen this on the lending side again and again. A client will place good offers on 20+ properties then give up their home search altogether. For me, I understand. For the real estate agent taking the time to show the properties, it can be a terrible loss of time.
One suggestion I've made to everyone in this type of market is to start understanding and using renovation loan products. Why? Simply, because the agents that know them and use that knowledge in their client meetings are overcoming the hurdles the market is throwing their way.
Simply put, using these projects will sell homes uninformed agents can't sell, and will help buyers get the few properties out there that won't be involved in bidding wars. The homes that need some work, TLC, or updating. The homes that haven't been changed at all since the 80's and show it.
Traditionally, renovation loans scare people. They're difficult to get done, involve contractors that can make the process a nightmare, and come with higher rates. That is true for some products. The 203k and Homestyle renovation loans are wonderful FHA and Conventional products, respectively, but the ease of use doesn't come close to the new renovation loan.
Our new product is a conventional loan with ZERO rate adjustments, and allows a buyer to finance up to 15% of an as-completed home value (appraiser assigns value to the home based on what is planned to be done w/the renovation money) to fix up a place. ANY type of non-structural work can be done as long as it adds value to the property.
That home that needs a new kitchen? Flooring? New roof? Updated bathrooms? All of these things are more can be financed with as little as 3% down at the exact same rate a buyer would see if they weren't using a renovation loan.
And ease of use? All we need is to know what work will be done, what it will cost, and that the person doing it is licensed to do so. So all it takes is a quote from a licensed contractor. The contractor can even be the buyer if they can show they're licensed. This is, by far, the easiest renovation loan to use. And it can help a frustrated seller that's seen their home that is filled with personality needs some updating sit on the market finally get a sale if the listing agent is savvy enough to know how this product works.
When a renovation loan is used, a buyer can take that house that almost meets their needs and turn it into home. It can help a seller who can't understand why they keep getting lowballed to sell to a buyer with plenty of vision and not plenty of budget. It can help an agent be a hero - avoid bidding wars for your buyers and sell the home in need of some TLC for the seller.
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