Brian Vogt: Welcome back to Ready Set Sold. Thanks so much for returning. To just sort of recap of where I left off the last time, I talked about as-is homes. If you’re not familiar with as-is homes, maybe you’ve heard the term. What that means is that the seller is gonna sell it with nothing done, no updating, no nothing. That could be a very smart choice depending on the situation. As I mentioned, it could be a parent, it could be a loved one that the kids were coming in and they’re gonna go ahead and just say let’s just get it on the market.
Well, part of the problem is, and this is what’s so great about having Dave and Deb here from New American Funding, is … But how do you get your money out? Maybe you have a buyer, so many times buyers want to do the work, they see the value or they see the cost of it, but they can’t get over the situation of where they’re gonna find the money. They’ve got enough money to get the FHA loan or whatever they’re doing, but they don’t have that funds. Deb, you guys have a solution, right?
Deb: We do. We have a loan called the 203K, which we do run into the as-is property quite a bit. If it’s a bank owned property or anything like that, they are not able to do the updates that the buyers want, so the 203K loan is amazing. If a buyer just, you know, likes the bones of the house, the structure, the location, all the important things, but wants the renovations of the new floor and the updated kitchen, the updated bath, we can finance those improvements into the loan. They buy home, close same day, whatever the contract date is, then they get contractor in there, three to six months to get the work done. It’s a great one.
I did the loan personally and just couldn’t be happier, but it’s really neat to be able to get into a home and have all that done, and finance it, [inaudible 00:01:54].
Brian Vogt: One of the things that I love that you said there, and Dave, maybe you can [inaudible 00:01:57] that too is that three to six months. It’s not like you have to rush in there and that you have to do it. You can, but you have some flexibility. You have some time, so you can make some decisions in what the buyer really wants out of their house.
Dave: Yeah, and the fantastic thing about the program is that there’s different versions of it. Whether you’re just doing cosmetic and updates like we’ve been talking about or you’re actually doing something structural with a foundation or you’re moving a wall or something, you can do those improvements as well. So yeah, just depending on the scope of the updates or improvements is gonna kind of determine the time frame, but you do have up to six months to complete the work.
Brian Vogt: Sure. I would imagine on those situations too and let me backtrack just a little bit. That is there’s [inaudible 00:02:42] to do this. In fact, we had a situation not too long ago where we would have loved to have had that situation in front of us. What happened was is they were doing a foreclosure and they wanted a 203K type of loan. Well, the lender didn’t … Just kind of blew it off and said, “Well, we’ll give them what we got.” Well, guess what? FHA or I don’t know if it was the Veteran’s or whoever had the loan came back and said, “No. We’re not taking the deal.”
Brian Vogt: It took like two months later and there was a cost and about … They eventually got it, but the cost and the aggravation was just unbelievable.
Brian Vogt: Putting the wrong product, and I think that’s really important to understand is making sure that you have the right product for what you wanting to do.
Deb: Right. Now you have to set the right expectations with the borrower on those 203Ks, for sure. I’ve worked with several lenders who did them, but they didn’t do them well. New American is very big on schooling the loan officer and making sure that you know what documentation is gonna be required of the contractors, of the borrower, you know, things like that. I think we’re on it better than the average kind of lender in the area, for sure. Which is-
Brian Vogt: Then from … Again, go ahead.
Deb: No, but it is. It is setting the right expectation. You’ve got to be ready if it’s not move-in ready on the day of closing.
Brian Vogt: Sure. Sure. Like you said, that can be a win-win for everybody.
Brian Vogt: It could be a win for the seller, could be a win for the buyer, a win for everybody. There’s nothing wrong with that. One thing I love what I heard you say was is basically you’re informational based. Okay, you don’t create the money, you don’t create the situation, but you listen to what people’s needs are and you put the right product with the right person.
Dave: Yeah, and just to clarify too, excuse me, so we’re not throwing around just lingo. The 203K is actually an FHA version of the renovation loan. We also offer a conventional version depending on the qualifications of the borrower, which is a homestyle renovation. Part of our job is just to educate the buyer and kind of explain the differences and our options. Then, obviously, let them choose the best options. We really try to take the extra step and make sure they’re educated on it because there are a few more steps involved.
Brian Vogt: Well, no, that’s good though, but you can get there.
Brian Vogt: That’s the thing. It’s another option. It’s another feather in a buyer’s hat or even realtor’s hat for that matter. To be able to help somebody and you, as the lender, it’s the advantage that you have that quite frankly, again, you know we had that situation I told you about. We were literally calling lender after lender and they almost kind of laughed at us. They said, “Well, no. We don’t do that. That’s crazy. Why would you want to do that?” Basically, unfortunately, the lenders just didn’t know what they were talking about.
Brian Vogt: So it does happen that way. Having said that, we’re gonna come back and we’re gonna talk about another big, big topic. That is the difference between a pre-approval and pre-qualification letter when you’re working with a lender and also you as a seller. It is so huge. You’re gonna be shocked when you hear out this information, so make sure you pay attention and come back. You’re listening to Ready Set Sold with your host, Brian Vogt.