FHA 203K Loans Used to Update Houses

Last week, I had written about a new listing that I had that needed some repairs and that I thought would be great for a 203K loan.  The blog generated a phone call from Paul Welden, Director of 203k Contractors. (http://203kcontractors.com).  He took some time to give me more details on this particular loan and I very much appreciate his time.  I knew that the loan was an excellent option for anyone that qualifies for an FHA loan to actually borrow money at the same time to complete repairs that might be needed to the home.  What I did not realize (just didn’t think about it) is that the loan can also be used to update that home that you are considering purchasing.  How many times do you have a client that really likes important aspects of a home, the right school system, great location, good layout, etc, but they are hesitant because the windows need updating, or there is wallpaper everywhere?  What I now realize is that your client can use the 203k loan to borrow a little extra money to complete the updates.  Use the loan to update that bathroom, take down the wallpaper and paint and replace those old appliances.  If you are a smart real estate agent providing the best services to your client, you will help them understand the numbers if the property meets their requirements. Look at the current fair market price in the current as-is condition, get an estimate for the updates that your clients want and give them a CMA for the house in an improved condition.  This will give your clients the information that they will need to see if the updates are a smart financial choice and usually will give them instant equity in the home. With so many existing homes on the market, we owe it to our clients to explore all of the possibilities for them to be able to get the best deal possible on the home of their dreams.

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