Accepting 203k Loan Financing for Sellers and Listing Agents
A recent comment on the “FHA 203k Question? Post it Here” page, brought up a subject worth writing more about. Hope you enjoy it.
I am the listing agent. I never see anything written about what the upside or downside would for the seller, in accepting an offer with a buyer using a 203k FHA.
Having a Buyer that is FHA 203K eligible is all good news for the Seller. With this loan program, the Buyer assumes the responsibility for any needed repairs or upgrades they may be looking to do….and those repairs are performed after closing so there’s no worries, no expenses and, if the lender is “on top of things”, no delays. Also, there’s no concerns for you or your client/seller regarding the present “as is” value of the home since the lender will be looking at the “after improved” value (the exception to this would be if you’re listing a HUD REO, in which case, HUD’s REO appraisal would come into play).
There’s very little downside to a seller accepting an offer with this type of financing. Typically 203K lenders who actively do these types of loans generally have the infrastructure in place to handle rehab loans and have good sales people who know the product(s) and can facilitate the closing for the buyer. That being said, as a listing agent, it’s in your best interest to reach out to the loan officer and probe a little on their experiencein handlingthesetypes of rehab loans and possibly some operations questionssuch as turn-around times as well. Anything that comes up during the appraisal or property inspection can be addressed since the buyer is already doing a rehab loan so that right there alleviates a lot of the financing hurdles due torequired work the seller doesn’t want to doorcan’t afford to do.
Now every once in a while the after improved property value of the home won’t pan out, but that’s pretty rare and usually due to over-improvement for the area or the home was listed too high in the first place. When this happens, usually the home price comes down or the borrower reduces the additional improvement items that aren’t requiredforthe loan. If not, the deal falls through and the next homebuyer has to deal with the same issue or the seller addressesthe items.
So, there you have it , hopefully this will shine some light on the pro’s and con’s for sellers and listing agents who have homebuyers that plan on financing with an FHA 203k loan.