Most real estate agents have been there: You have a listing that has great bones or offers a lot of space for the money, but some aspects of its condition are likely to frighten most buyers away. With a unique financing option available for homes in need of renovation, however, you may actually have a property that’s more marketable than you think.
The 203k loan insured by the FHA is designed to make financing for properties in disrepair more accessible by combining the estimated costs of repairs and the home’s purchase price in a single loan. Suggesting this option to buyers may help them see the possibilities in a property and lead to a sale.
The FHA 203k loan program offers a number of advantages:
- Unsafe homes can be made inhabitable, improving the neighborhood.
- Buyers are able to get more house for the money and cover improvement costs.
- The square footage of homes can be increased at a lower cost.
- Agents can offer a greater inventory and close more sales.
There are two types of 203k loans: a streamlined program for properties that won’t need structural repairs, and a traditional loan for properties that do need structural work. Most types of home improvements are covered with the exception of “luxury” features such as swimming pools.
If you choose to market homes that may be eligible for 203k financing, consider involving a lender and a general contractor who have experience meeting the loans’ unique requirements.
Contractor Connection offers a free service that matches homeowners with a top-quality, thoroughly vetted contractor whose workmanship is guaranteed for three years.
Lance Malcolm is chief operating officer for Contractor Connection, where he is responsible for leading daily operations.
For more information, visit ContractorConnection.com.
