Realtors, how would you like to sell every house you sell?

I have told Real Estate Pros for over twenty years that the FHA 203k product should be in everyone's suitcase to be used as needed... BUT WAIT! I've also stated that every home sale should be an FHA 203k or other renovation type loan. They are available up to $3,000,000 loan amount that incudes purchase and renovation.

Now back to the topic, you get a client and take them out to look at a few houses... inventory is low so you don't find anything that fits their needs exactly. Get back to your office and ask the buyers to review each house they saw today... make a list of the things they liked about each one and then what they didn't like about each one.

Now take those lists and see which one has the least amount of changes they would like, explain to them that there is a loan that offers renovation, updating, additions, etc, and that would be the basis of your renovation sale. We can make those changes and hou make that sale right now. Remember that all of these renovation loans closes, you get paid, then the work is started. Your consultant will stay with the project till completion.

In a few years when they are ready to sell and move on, you will likely be listing a larger home in better shape than what you sold them. 

To learn more about the FHA 203k loan program go to www.203kOnLine.com. To contact us for a consultation please go to www.my203kconsultant.com and "order a consultation". If you like what you see here please take a look at Another blog by Mike Young in Spanish and other languages.

Got a 203k project giving you "fits" contact www.203k911.com. If you are looking for quality 203k software for consultants to speed up the underwriting process..

Mike Young, 203k Team Leader    

We have fourteen offices in CA covering both CA states, NorCAL and SoCAL where we can cover the entire state.

To learn more about the FHA 203k loan program go to www.203kOnLine.com. To contact us for a consultation please go to www.my203kconsultant.com and "order a consultation". If you like what you see here please take a look at Another blog by Mike Young in Spanish and other languages.

Got a 203k project giving you "fits" contact www.203k911.com. If you are looking for quality 203k software for consultants to speed up the underwriting process..

    

Why do they need 45-60 days to close a 203k loan? continued...

... Donna was curious of course, then I asked her how long does it take to close a standard FHA loan, the 203b? She said 15-21 days, then I told her the naked truth, "you can close a full 203k in the same time it takes you to close a 203b loan. We started her 1st 203k loan and she did everything right. She called the consultant out at the same time she started her loan process. We both headed down the path to the finish line together. [Most lenders will get all of their work done and call us to say "all we need is your report". These lenders will take 45-60 days to close because now all they have to do is call and interurpt us asking "how does it look?  [a total waste of our time to ask that]. 

It seems so easy for me to understand that if you call me two or three times each day and break my train of thought... forcing me to calculate the possible completion time it is demoralizing to say the least. You are trying to bust your butt to get the job out. a key person on that deal is calling you, you pick up the phone thinking there is something wrong or they might have new input for the job and they say "how is it going?" Maybe some other consultants are much better than me but when I get on a roll and I'm writing that report, this totally blows me out. I then go get a glass of water and try to figure out where I was in the report writing phase. Read what I wrote last and try to complete that sentence. 

BTW, Donna closed her first full 203k loan in 21 days and called to ask "why does everyone else say 45-60 days to close?". Donna is a shinning star in this business, She lets us start when she does. In all fairness the clock starts ticking once the lender has all of your financial paperwork but we can start the day you apply. HUD designed what we do to take 2 weeks then go to bid. We typically take about a week to achieve a report ready to go to bid. The contractors bidding the job may take several weeks, and that can hold up the process. I had a job the other day and the client met contractor 1 at the jobsite and asked for a bid. The contractor asked him who created his bid, the client indicated it was me, and the response was that he would do it for my bid numbers. He hadn't seen my bid numbers but felt confident that the numbers would be fair and it saved him allot of time. The client asked me for another contractor recommendation though he really liked the first guy. The second contractor came out and did exactly the same thing. If Mike bid the job I'm good with his numbers. 

The client asked me for another so he is trying to get a bid from the 3rd contractor. This indecision can also slow down the process. We offer contractors a product we call "lost opportunity" bidding which is a great product for a contractor to use as it allows him to hire us when he doesn't have the time to bid a project. We do it for him and save him that time away from his other projects. If you are having issues with getting a contractor to bid your project give us a call.

Mike Young Team Leader    

We have fourteen offices in CA covering both CA states, NorCAL and SoCAL where we can cover the entire state. It really doesn't matter as we have associate offices in most every state in the USA. Find a consulant anywhere in the country.

To learn more about the FHA 203k loan program go to www.203kOnLine.com. To contact us for a consultation please go to www.my203kconsultant.com and "order a consultation". If you like what you see here please take a look at Another blog by Mike Young in Spanish and other languages.

Got a 203k project giving you "fits" contact www.203k911.com. If you are looking for quality 203k software for consultants to speed up the underwriting process..

Skype name: the203kconsultant

    

What if we don't complete our 203k project on time?

You may need an extension of time to complete the project.

Each construction project has an estimated date of completion set by the consultant or the lender and based on the amount of construction and not to exceed 6 months at the onset. Variables exist that include the current schedule of the contractor at the time of the closing. If the contractor is notified the loan closed and they can start working asap, does't mean they have to drop everything and begin your project.

1) What really happens is that the contractor is notified of the closing,

2) The contractor checks their schedule and decides that they have a project completing in a week or two and that crew will be sent to the new project at that time.

3) Materials procurement then takes place, the contractor starts gathering the items they will need to complete you project. While this is going on the contractor will likely set up a meeting with the borrower's to lay out a plan of attack to get this porject completed asap. The contractor makes more money per hour the faster he gets the project completed. Therefore they will be anxious to get started and to get finished.

All this is happening in the background and the borrower doesn't see very much happening and might be getting anxiety about their project. This shouldn't happen as they have been told what is happening behind the scenes.

Once the project begins construction the contractor is under contract to maintain a crew on the job each day thereafter to insure a speedy conclusion to the project. At no time should the contractor cease work on the project for more than thirty days. I wouldn't let them wait more than a week before you call them and find out what is going on. There must be a draw inspection for work completed each thirty days from the close of escrow.

If we look at this logically the first draw is typically is smaller than the future draws as there is less than thirty days of work. If the project is was originally set up to be completed in 4 months and we get to the 3.5 mark you will need to create and execute an extension request. The extension request should include the following:

A) Reason for the delay

B) Time line with a list of items not yet complete and an estimate of when they think each line item may be completed. This time line should be on the contractor's letterhead and signed by both the contractor and borrower. 

C) New estimated completion date.

If your project was originally set up for 6 months you could get up to five months additionally in this manner. Some just take a little longer but it is no one's best interest to drag the completion of a project manager. 
Mike Young Team Leader    

We have fourteen offices in CA covering both CA states, NorCAL and SoCAL where we can cover the entire state. It really doesn't matter as we have associate offices in most every state in the USA. Find a consulant anywhere in the country.

To learn more about the FHA 203k loan program go to www.203kOnLine.com. To contact us for a consultation please go to www.my203kconsultant.com and "order a consultation". If you like what you see here please take a look at Another blog by Mike Young in Spanish and other languages.

Got a 203k project giving you "fits" contact www.203k911.com. If you are looking for quality 203k software for consultants to speed up the underwriting process..

Skype name: the203kconsultant

    

How to make money consulting in spite of the HUD Guideline

That's right. HUD in its infinite wisdom has come out with what was touted as the "new guideline" while in actuality it was not new at all with regards to 203k consultants. In fact it took us back to re-enforce the 1994 fee levels. An outrage for many of us as you can imagine. They don't go a year without an increase in their wages and expect us to go back 21 years for ours. 

We have worked hard, building our businesses and when all other fees were deregulated in 2011 we took that as a good thing, though it turns out it was deregulated for all but our fees. Now a compliance inspector can get $450 to make a 2 minute inspection to see if a broken window has been fixed or not but we are expected to take $100 and look at how a home is put together. Is that window properly flashed, sealed, etc, on top of the broken glass repaired.  On top of that they now have dumped change orders on us and took it away from the lender… except some lenders want to “okay the CO prior to commencing the work” like they ever did that in the first place. Most didn’t, most rely on us in the field to make that decision for them.

There has been lots of talk on the internet and blogs about how many of you are planning to get out of the business as you can’t possibly do a draw inspection for $100. You are absolutely correct. No one can and make any money at it.

Join us for a 1-hour webinar and we’ll show you what you need to do to make money in this business in-spite of the Guideline. Yea, you gotta pay to see the solution, You will see how you can increase your profits substantially over the consulting work you have been doing provided you have been consulting properly... some of you aren't and weren't. The fee to attend this 1-hour session is only $49 and may run over with Q&A session.
 
We’ll show you how to take your knowledge as a 203k consultant and turn it into a profit center for your business like you won’t believe till you see it, and no more draw inspections unless you want them.


Be sure to send us an email to be notified of the next presentation

Mike Young Team Leader    

We have fourteen offices in CA covering both CA states, NorCAL and SoCAL where we can cover the entire state. It really doesn't matter as we have associate offices in most every state in the USA. Find a consulant anywhere in the country.

To learn more about the FHA 203k loan program go to www.203kOnLine.com. To contact us for a consultation please go to www.my203kconsultant.com and "order a consultation". If you like what you see here please take a look at Another blog by Mike Young in Spanish and other languages.

Got a 203k project giving you "fits" contact www.203k911.com. If you are looking for quality 203k software for consultants to speed up the underwriting process..

Skype name: the203kconsultant

    

Sat in on a seminar yesterday... lets clear the air

I heard another person (consultant)  telling clients they get $1250 for a 203k and you can get it all reimbursed in the loan back to the client. This simply NOT true, sorry, but the only fee that is reimburseable per the guideline is the consultation fee and feasibility report, NOT a separate home inspection fee. READ the guideline and you will see that a consulation includes a "203k property inspection". If you charged the client for a home inspection too then you should also provide a full home inspection report of quite a number of pages, if so you can get your full consultation fee. A feasibility cannot or at least should not be charged unless you provide a feasibility report as well and most of the time you do not.

If you charge separately for a full home inspection and deliver one, then you are entitled to be paid for your service but NOT from the 203k escrow, that would be against the guideline. I received a call from a HOC the other day where I was told we cannot sell any ansilary products as it would be a conflict of interest.  No termite report, no engineering report, no architectural services, yet we all have been doing all of the above as needed to get the job done faster.  I dissagree.  I am an engineer or architect, I can be a consultant therefore they are clearly wrong. 

Mike Young Team Leader    

We have fourteen offices in CA covering both CA states, NorCAL and SoCAL where we can cover the entire state. It really doesn't matter as we have associate offices in most every state in the USA. Find a consulant anywhere in the country.

To learn more about the FHA 203k loan program go to www.203kOnLine.com. To contact us for a consultation please go to www.my203kconsultant.com and "order a consultation". If you like what you see here please take a look at Another blog by Mike Young in Spanish and other languages.

Got a 203k project giving you "fits" contact www.203k911.com. If you are looking for quality 203k software for consultants to speed up the underwriting process..

Skype name: the203kconsultant

    

Contractors typically are used to getting 10% down at the signing of their contract, and another 30% when materials are landed at the sight. That hasn't been the case with a Standard 203k where they must work soley on their own credit and cash to get started then get "reimbursed" for each phase to get their money back.
The "Limited 203k" loans, per the guiedline always provided 50% of the project cost for materials  up front to the contractor unless you were dealing with a lender like Wells Fargo that only allowed 35% or Prospect Mortgage at 40%. Most other lenders still provide the full 50% per the guideline. Years ago I would see B of A, close the loan and in many cases it took them up to six weeks to provide the "50% up front money". These "limited 203k" project were quite often only going to take 30 days to six weeks to complete. They finally got with the program (years ago) and started providing the money from escrow at closing.

The new rule as it is proposed for

Standard 203(k) transactions, Mortgagees may disburse the following at closing:

• permit fees (the permit must be obtained before work commences [to be reimbursed at closing]);
• prepaid architectural or engineering fees;
• prepaid Consultant fees; [reimbursed to the borrower] [This can be added to your escrow instructions to be used as part of their down payment or closing costs too]
• materials costs for items, prepaid by the Borrower in cash or by the contractor, where a contract is established with the supplier and an order is placed with the manufacturer for delivery at a later date; and
• up to 50 percent of materials costs for items, not yet paid for by the borrower or contractor, where a contract is established with the supplier and an order is placed with the manufacturer for delivery at a later date
• For any Disbursements paid to the contractor, the Mortgagee must hold back 10 percent of the draw request in the Contingency Reserve.

What is a feasibility analysis or report?

That is a great question as many, and I mean many, lenders get it confused with a consultation. Or worse yet the second half of a consultation.

Let's start with the order. A lender typically calls in with an order for a feasibility report. This product is a quick trip to the site, no more than thirty minutes on the site for a SFR and a report that is generated about an hour after we return to the office. This report is a thumbnail sketch of the work to be completed to bring the home to the FHA Minimum Property Standards. Nothing more. Not enough for a contractor to use to create a bid. This is a tool to help determine the condition of the property with regards to the Minimum Property Standards that includes health and safety issues as well as most, if not all, structural issues.

Where the break down occurs is when the lender calls everything a "feasibility report" and actually is ordering the "consultant report". The consultant report requires a much more extensive inspection of the property and a detailed scope of work, sometimes referred to as the SOR (Scope of Renovation). This report should be detailed enough for the contractor to make a bid short the final working drawings.

There may be adjustments after the final working drawings are provided, if they are necessary at all.

My 203k consultant isn't doing a good job of managing the contractor!

Well, I don't know how to put this any other way but "it isn't the consultant's job to manage the contractor" so he or she shouldn't be expected to do that.

1) The consultant is a consultant when first hired. They will consult with you and help you develop a plan to renovate the property. A "scope of work" or "scope of renovation" so that every contractor you might have bid this job does so with the same list of items to complete.

2) Secondly the consultant can assist you in finding a lender or a contractor if you haven't found one. We typically know who can close these loans fast and who only talks a good talk. We can give you our "do not use" list of contractors but only in the event you have chosen one of them. Some contractors, a very short list, don't have a clue about contracting but have had the ability to pass the test and get their license.

3) The consultant can assist you in choosing a contractor from the bids that have come in on the project. The lowest bid may not be the best bid. We had one not too long ago where we bid the job at $82,000 and the first contractor bid over $100,000 and the second bid at $67,000. Of course the owner felt they wanted the $67,000 bid. That is fine but we asked the lender to fund the $82,000 as it was pretty clear to me that they forgot something or made an error and we are not here to bankrupt a contractor. 

4) Once the loan closes we are "no longer the consultant" however we then work for the lender as the "draw inspector" on our projects. 

No where in our job description does it say we have to, or are expected to, manage the contractor. On the contrary we "consulted" and told you right up front that "YOU are the boss, YOU are responsible to choose the contractor, YOU are responsible to call the contractor and communicate your pleasure or displeasure with the contractor. 

As an inspector to monitor the progress we are typically out to see the property about once every 30 days so "the borrower", being there nearly every day, must call the contractor and insure they are on the job when it appears they aren't.

The Homeowner/Contractor agreement says very clearly that once the project begins the contractor should have someone on the project working each day until it is completed so feel free to call them and let them know when their employee(s) don't show up on the job. 

Mike Young, 203k Team Leader    

We have fourteen offices in CA covering both CA states, NorCAL and SoCAL where we can cover the entire state. To learn more about the FHA 203k loan program go to www.203kOnLine.com. To contact us for a consultation please go to www.my203kconsultant.com and "order a consultation". If you like what you see here please take a look at Another blog by Mike Young in Spanish and other languages. Got a 203k project giving you "fits" contact www.203k911.com. If you are looking for quality 203k software for consultants to speed up the underwriting process..

Skype name: the203kconsultant

    

My fixer aquisition cost is $850,000 and it needs $250,000 in work

Just got this call... YES, we can help you.

Chris Davis at Everbank will guide you through their process. Just click on the link for Chris' web-page. It still has to appraise for the full amount including the renovation or in this example about $1.1 Million or so.

Last week the question was for a $745,000 sales price and $150,000 in construction. Yes, these are now doable up to $3 Million loan amount. Not the typical LTV of course but Chris will fill you in on their guidelines for this product. 

We had one a while back that, had it been a single family home would have worked out well for the $1.5 Million purchase and $625,500 renovation project. You can see that this opens up a whole lot more homes for renovations.

Remember the one we did last year for an $888,000 purchase and $150,000, this loan would have been better for the client than the 203k was able to do.

Now you have renovation financing for those higher end home.

REO Realtors can move more of those high end foreclosures with this loan product.

Mike Young, 203k Team Leader  
 

We have fourteen offices in CA covering both CA states, NorCAL and SoCAL where we can cover the entire state.

To learn more about the FHA 203k loan program go to www.203kOnLine.com. To contact us for a consultation please go to www.my203kconsultant.com and "order a consultation". If you like what you see here please take a look at Another blog by Mike Young in Spanish and other languages.

Got a 203k project giving you "fits" contact www.203k911.com. If you are looking for quality 203k software for consultants to speed up the underwriting process...

Skype name: the203kconsultant

    

Limited 203k, the new name for the old Streamlined k product with FHA. Where you get the money to purhase or refinance a 1-4 unit property and get the money to make the repairs or upgrades all in one low interest loan. 

You can always tell when a lender is transitiioning into the standard 203k realm when they have been doing the limited 203k for so many years. It is easy because they ask for an invoice from the contractor for the items they want to get paid on. Not necessary for the lender to do that. 

On a limited 203k that practice is common practice but on a Full or Standard 203k the draw request prevails and is the only required paperwork from the contractor. 

For Standard 203(k) transactions, Mortgagees may disburse the following at closing:

• permit fees (the permit must be obtained before work commences);
• prepaid architectural or engineering fees;
• prepaid Consultant fees; [reimbursed to the borrower]
• materials costs for items, prepaid by the Borrower in cash or by the contractor, where a contract is established with the supplier and an order is placed with the manufacturer for delivery at a later date; and
• up to 50 percent of materials costs for items, not yet paid for by the borrower or contractor, where a contract is established with the supplier and an order is placed with the manufacturer for delivery at a later date
• For any Disbursements paid to the contractor, the Mortgagee must hold back 10 percent of the draw request in the Contingency Reserve.

This one gets me all the time. You forgot the case number, here it is please insert it on each page of the report. I'm surprised you forgot it with as many of these as you have done.

LMAO, the case number is ordered after our report is completed and turned in. It is ordered when the order the appraisal, they can't order the appraisal till they know the cost of the repairs. It is a "catch 22" for sure. There isn't a week that goes by that we don't get asked to provide the case number on all the forms. It is actually a pretty simple thing to do with our proprietary software. We merely add the case number and reprint the report with a push of a button then send that pdf to the client and their lender. 

If you are a 203k or a HomeStyle® Renovation Mortgage lender and would like to try our software for FREE to kick the tires please request it and we are happy to provide it to you. It is actually an asset to many who only do the streamlined k, soon to be renamed "Limited 203k". Our software output was voted "easiest to underwrite" by a 98% margin over our competition. If you haven't tried it ask for a free trial. If your consultants reports are adding correctly or are just leaving too much work for you.. give ours a try. 

Can you add my contractor to your list?

Sure we can. In fact this week we added another four or five.. All of them went something like this - 

I get a call and they ask to be on our list, I tell them to send me an email with all of their contact information and they all must hear something I didn't say as they ALL sent 

Name

Company name

Phone number, and of course I do have their email address.

Possibly a web address, I guess that is so I can look it up more easily. 

And that is all. Yep, that is what they think all of their contact information consists of. Yet when I input it into a report the lender expects a "license number", full address, not a PO Box, email address, name, company name, etc. 

I must be saying it incorrectly as they all did it. What is so hard about 

Name

Company name,

Full physical address

PO Box if you have one

Phone number

License number

I hope they know  that we need this so we can mail checks, visit their site to see they are really there, email paperwork to them, call them if needed. Did I say all them have been in business from ten to twenty years and still can't get it right?

If you want your contractor on any list, make as easy as possible by providing all of the necessary information at one time on one piece of paper. One of them sent a second email and failed to reply to that one so I had the first bit of info, I had to find that other email to get him into the system. Ya gotta love 'em.

The latest 203K Training Center Software guides professionals on How to Become a 203K Consultant 

203K Training Center has recently introduced new software designed to streamline a professional’s path to becoming a qualified 203K consultant. The company’s 203K software for consultants will provide clients with everything they require to work with lenders and complete a 203K loan with seamless precision from their very first project.

203K loans are designed to provide homebuyers the funds they need to both purchase and renovate their property through one singular mortgage contract with a lender. In order for both the lender and the buyer to be protected as part of the deal, a specialist needs to review the property and ensure that the property’s condition is suitable for a future 203K loan. It requires a special set of skills to begin analyzing potential properties for 203K loans, and these skills are now taught through the 203K consultant training software from 203K Training Center.

203K Training Center is offering cost-effective pricing on their latest software, which has been designed to provide consultants with seamless entries into their 203K projects. Each solution offered by the company is designed to streamline such processes as populating forms necessary for 203K completion, as well as prompt consultants at various stages. In addition, the software will help generate the necessary reports for 203K consultants to complete their work effectively and within a limited timeframe.

The software offered from the 203K Training Center is the most effective solution designed to streamline complex 203K projects.