How I Saved the Deal: "Whatever it takes"

posted Jan 19, 2018, 1:25 PM by Joyce Evans   [ updated Jan 19, 2018, 1:39 PM ]

Here is the latest in a series of occasional articles by PSAR members on the topic:” How I Saved the Deal.”

By PSAR REALTOR® Mike Anderson

In real estate sales, the goal is to help people move, whether buying that new home or selling the current one. However, I’ve experienced in my real estate career predicaments when in order to save the deal and help people move, it was necessary to help people move -- literally.

You’ve heard the phrase “whatever it takes,” which may refer to achieving goals for calls or meeting clients, door knocking or caravan visits. But, in my case, more than once, “whatever it takes” meant pitching in to help a seller finish packing and loading personal possessions, even lifting boxes to the back of a moving truck. Once, my sellers had lived in their home for several decades and had raised their family there; especially for the mother, moving became very emotional, even debilitating. So, in order to save the deal, I had to step in and do “whatever it takes,” which, in this instance, was helping the son and movers finish packing boxes and wheeling them out to the waiting truck.

With another client, “whatever it takes” meant arranging for home repairs, landscaping improvement, termite tenting and even bat remediation. It was a vacant home and the escrow closing date was fast approaching. The seller, who lived out of town, needed to remove trash and personal items from the property, sod a new lawn, complete agreed-upon repairs and schedule pest control services. Unfortunately, the help the seller expected didn't materialize in time.

So, in order to save the deal since the buyers were eager to move in, I had to step in and coordinate jobs with my favorite contractors for home repairs, landscaping, and trash removal. A huge key to saving deals in real estate sales is maintaining close relationships with firms who are trustworthy, professional and honest, and who, at times, can be called upon at the last minute. 

In addition to this particular deal, I was certainly surprised with the results from the termite inspection. Not only did the home have termite infestation but also several dozen bats lived in the attic.

Did you know that not all termite companies also handle bat removal? I learned quickly that most termite companies are hands-off when it comes to wildlife bat removal and control. For a time, this situation was driving me cuckoo, or should I say “batty.” Fortunately, I found another company that did an excellent job. The company sprayed a chemical that encouraged the bats to leave, followed by cleaning the bat droppings on the attic floor and sealing up entry points and openings in the attic.

The best advice I can give to any REALTOR® who wants to save the deal is to have a wide variety of people ready to call upon when surprises happen. Also, keep in mind that sometimes it requires putting on work gloves and jeans to do “whatever it takes” to save the deal!

Housing Forecast for 2018: No Housing Bubble

posted Jan 12, 2018, 4:04 PM by Joyce Evans

Happy New Year. As 2018 begins, what can you expect for the local and statewide real estate industry? Predictions vary from housing industry experts, but here’s what some of them are saying:

It’s all about inventory, even as demand remains strong.

While the economy and stock markets are doing remarkably well, housing availability remains a challenge, but that’s nothing new. Shrinking inventory is likely to be a major factor shaping the 2018 housing market. Yet, Realtor.com expects more houses could be for sale toward the end of the year, giving homebuyers a greater selection to choose from. “It looks like we could get to a point where we’re seeing growth in inventory sometime in the fall of 2018,” said Danielle Hale, chief economist for Realtor.com.

Meanwhile, demand for housing will remain a constant, resulting in rising prices. Watch for demand from a variety of clients, ranging from millennials, babyboomers, and immigrants to foreign investors and even Gen Xers who want a bigger house. Also, don’t forget about bankruptcy survivors who have waited out their seven-year year exile. Even with some people moving out of California for more affordable areas, demand will not wane.

Clients will still be eager to buy real estate because:  home prices are appreciating and it’s a safe investment over the long haul; millennials need a home to raise their families; flips of older properties continue to provide returns; the economy is steadily improving under the Trump administration; foreigners are still eager to own U.S. property.

With the shortage of listings, homes may sell even faster in 2018. In 2017, 25 percent of homes in the U.S. sold in two weeks or less and one in five homes in less than one week. The California Association of REALTORS® recently reported that homes in San Diego County remained on the market for 17 days in November 2017, 19 days in October 2017 and 20 days in November 2016.

Mortgage rates will remain affordable.

Redfin expects the 30-year mortgage rate to inch up to between 4.3 and 4.5 percent for a standard, 30-year loan in 2018, which is still affordable for many buyers. Meanwhile, CoreLogic’s estimate is that the 30-year fixed will average 4.7 percent in December 2018. Mortgage rates are expected to slowly increase as a result of a portfolio reduction by the Federal Reserve. Back in October 2017, the Federal Reserve began reducing the size of its $4.5 trillion asset portfolio that includes $1.7 trillion in mortgage securities.

However, the combination of higher home prices and higher interest rates means mortgage payments will be higher in 2018 for the same home, which means a decline in affordability. For example, if mortgage rates rise to 4.7 percent toward the end of 2018, and the median price of existing homes rises by 4.1 percent, then monthly mortgage payments for a typical house would be higher. According to CoreLogic, monthly payments of principal and interest rose 13 percent in 2017, compared to 2016.

On the other hand, expect more options for buyers with credit issues. A growing number of lenders will offer interest-only mortgages and even loans with limited income documentation. Some of these mortgages are dubbed “non-QM” because they don’t meet Fannie Mae’s and Freddie Mac’s plain-vanilla “qualified mortgage” rules.

No housing bubble in sight.

Home prices are expected to climb modestly, but not as fast. Home-price appreciation is expected to cool down in 2018 after a torrid couple of years, which is good news for first-time buyers.

No bubble is predicted even in impossibly hot markets such as the Bay Area. That’s because buyers are still making large down payments or paying all cash and sellers are getting their asking price -- and then some. Overall, today’s average buyer has less debt relative to the value of their home than they did in 2006, before that infamous bubble burst.

Also, construction of single-family houses is expected to rise sharply in 2018. Take, for example, the city of Santee. Permits for 3,500 new homes are under review by the city. Currently, about 500 homes are under construction, which are part of 13 separate housing projects. In 2017, just 72 apartments, condos, and homes were built in the city.

Tax reform not expected to deter most homebuyers and sellers.

Under the new tax reform law, buyers can deduct interest on mortgages up to $750,000 for a home bought after Dec. 15, which is down from the previous $1-million limit. (Homes purchased on that date or before aren’t affected.)  That means a homebuyer with a 20 percent down payment can purchase a $930,000 home and still deduct all the interest. Even for a borrower who took out a $1-million loan at 4 percent interest, $30,024 of interest payments are deductible in the first year, leaving $9,656 that are not.

In most cases, if a buyer borrows a million bucks to get a home, the write-off is typically not their primary concern.  For sellers, single homeowners can still exclude $250,000 of sale proceeds from capital gains taxes as long as they’ve lived in the home for two out of the previous five years. Couples can continue to exclude up to $500,000.

Growth in the economy.

Brad Inman is predicting the economy will grow like crazy. He cites that job creation is at record levels, unemployment is at a 17-year low, wages are feeling upward pressure and companies are investing at a fast and furious pace. He writes, “A backdrop of political uncertainty will not slow down the global economic thoroughbred that is galloping at a full run.”

Guidelines for Unlicensed Assistants

posted Jan 10, 2018, 8:37 AM by Richard D'Ascoli   [ updated Jan 10, 2018, 8:39 AM ]

The Calbre issued needed Guidelines for Unlicensed Assistants.  Read more to find out about how they can or cannot be involved in:

  • Cold calling
  • Open Houses
  • CMA's
  • Communicating with the public 
  • Arranging appointments
  • Accessing property
  • Advertising, preparation, and delivery of documents
  • Trust funds  
  • Communicating with Principles
  • Reviewing Documents

Join the PSAR Charity Committee and make a difference in our community.

posted Jan 9, 2018, 11:03 AM by Joyce Evans   [ updated Jan 10, 2018, 12:32 PM ]


PSAR Charity Committee 2017

The PSAR Charity Committee is looking for members who want to become involved and make a difference in our community. 

To join contact Angie West at awest@firstam.com or Kim Peterson at kim@californiapreferred.com.

Take a look at the video below to see the great things the Charity Committee has done.



















See the charities and causes that PSAR has supported in the video below.

PSAR Charitable Giving and Participation




PSAR announces endorsement of Max Zaker for Chula Vista City Council

posted Jan 8, 2018, 3:54 PM by Joyce Evans   [ updated Jan 9, 2018, 9:48 AM ]

The Pacific Southwest Association of REALTORS® (PSAR), a 2,500-member trade group for San Diego-area realtors, has announced its endorsement of REALTOR® member Max Zaker for the Chula Vista City Council. Zaker is running to represent Chula Vista’s District 2 and succeed Patricia Aguilar, who has served on the city council since 2010 and is termed out.

Zaker, owner of a successful real estate brokerage, has served since 2015 as a member of PSAR’s South County Government Affairs Committee, and chaired the committee in 2016 and 2017. This committee is focused on all things governmental, including public policy positioning and development, as well as emerging trends that could affect the professional interests of homeowners and small businesses.

“We are proud to endorse Max based on his commitment to public service and his dedication to the community and as an advocate for the interests of small business,” said Ditas Yamane, 2018 chair of PSAR’s South County Government Affairs Committee. “As an entrepreneur, he has built and developed several small-to-midsize companies that are owned and operated out of Chula Vista, bringing jobs to the community. Max believes in an engaged local government that supports responsible development.”

“I am honored and proud to accept the endorsement of PSAR,” Zaker said. “I’ve been an entrepreneur and a public servant all my life. I have a passion to create economic opportunities and help other people build a successful business for themselves. My problem-solving nature and personal journey as an immigrant has taught me the value of hard work and that we all have a responsibility to care for each other and our community.”

Zaker is no stranger to public service. He currently serves on the Chula Vista Planning Commission and Growth Management Oversight Commission.

His leadership experience includes a prior role as the former director of the Downtown San Diego Partnership (DSDP), a non-profit business organization that assists with the revitalization of Downtown San Diego. He oversaw implementation of San Diego’s first property-based business improvement district (PBID). Also at DSDP, he was involved with the “Clean and Safe” program, which was designed to improve the appearance and enhance public safety in San Diego’s Downtown area. 

Additionally, Zaker served on the leadership team at the Jacob Center for Neighborhood Innovation, a San Diego non-profit that partnered with residents in Southeastern San Diego for community change. As the Jacobs Center’s business development director, he was part of San Diego’s largest social enterprise designed to create jobs for local residents and serve as a destination business model. He was involved with the development of several office, retail and industrial properties, including Market Creek Plaza commercial center, which created local business, jobs, and resident ownership opportunities. He also served on the board of the Southeastern Diamond Business District, serving as 2011-2012 chair.

Zaker also has been a leader as co-author of the City of San Diego's first micro-lending program. As a result, in 2000, Zaker was awarded with a special designation from the U.S. Department of Justice. He was recognized as a “Person of Special Interest” by the U.S. Government’s Executive Office for Immigration Review for his significant contributions to the U.S economy.

“Local governments need experienced leaders to be engaged and to promote financially responsible solutions that can provide high-level city services to support a thriving community,” Zaker said. “As a socially responsible business leader, my goals for Chula Vista are to create economic growth by supporting the proposed world-class bayfront master plan and the continuing revitalization of Chula Vista’s Downtown corridor. I want to help improve Chula Vista’s Broadway commercial corridor to grow the local economy and capture new business opportunities that will arrive from the bayfront project. Our city can create policies that can bring high-quality jobs in the science, medical, education, and technology fields.”

Zaker has lived in Chula Vista with his wife Claudia for more than 15 years, where they have raised their three children.  Claudia is a Chula Vista native and former San Diego County Deputy Sheriff.

Zaker’s campaign website is www.maxforchulavista.com.

Zaker, a Democrat, is running against three other candidates in the primary election on June 5. The two top vote-getters will advance to the Nov. 6 ballot. District 2 encompasses the northwest area of the city, including Bayfront Park and state Route 54 west to L Street. It will be the first time that residents in those areas will vote by district since 2012, when voters approved a change in the city’s charter that required council members to be elected by geographic district instead of citywide votes. District-wide elections for council seats began with the 2016 election.

Founded in 1928, the Pacific Southwest Association of REALTORS® offers educational training, networking, professional development, advocacy and other services and resources to its REALTOR® and affiliate members. Offices are located in Chula Vista and El Cajon. For more information, visit www.PSAR.org.

Home staging can raise sales price

posted Jan 5, 2018, 3:59 PM by Joyce Evans   [ updated Jan 5, 2018, 4:00 PM ]

Here is the latest in a series of occasional articles on “Best Practices” for PSAR members from 2018 PSAR President Jan Farley.

As real estate professionals representing home sellers who are expecting top dollar for their property, you have the opportunity to recommend home staging ideas that can improve attractiveness and draw a premium price. But, the real fun is to heighten a home’s curb appeal with tweaks that cost very little money.

Although some believe that staging is optional, it really shouldn’t be. Com’on, why settle for a lower sales price if you don’t have to? Plus, a staged home sells faster. So, here are a few ideas on staging a home on the cheap without breaking the bank.

  • Declutter bedrooms for the photos or video that will be posted online. Remember, the benefits of staging go beyond appealing to warm bodies at an open house. That’s because most buyers first go online to first check-out a home for sale. Your goal is to give shoppers a visual picture of themselves as residents of that home. Consider maximizing space by removing some furniture and furnishings from certain rooms for the photo session, especially those rooms designated by the residents for storage. As everyone knows, it’s not easy for buyers to see past clutter. Plus, open space can make a home look bigger.
  • Make decluttering fun by hosting a 30-or-60-day packing party for your sellers as they prepare for their move to their future home. Order a pizza and request the sellers to pack-up any unnecessary or personal items, room by room, not needed for the next one-to-two months. Have a plan to store the packed items perhaps in a self-storage facility or in the garage until the home sells. Put away knickknacks. Keep in mind that buyers will be interested in your closet space, so tossing everything into the closet to hide it away could make a home look like it lacks closet space. Often, people are amazed at how much space they have after their home is decluttered.
  • Sanitize and get the house sparkling clean. No one wants to see splattered spaghetti sauce, grimy grease or piles of crumbs in their potential new home. Every surface should sparkle, from shining floors and gleaming windows to clean counters and scrubbed grout. The extra effort will be worth the trouble. Wood cabinets can be refreshed to make them look new. And, don’t forget the baseboards, trim and floor corners. Give all floors a thorough cleaning and steam-clean the carpets if necessary to get rid of pet odors. Hide the extra-loved pet toys and doggie bones when tours are scheduled. If wood floors are in poor shape, then the strategic placement of area floor rugs can go a long way. 
  • Rearrange furniture in rooms with a single purpose in mind. Suggest to sellers that the best way to visually showcase their home may be to reposition some furniture, artwork, and accessories in order to improve traffic flow or highlight a home’s distinctiveness and true potential. For example, some dining rooms can look larger without a desk in the corner and some bedrooms can look more inviting with a comfortable armchair recliner in a sitting area. Also, bathrooms can look prim and polished with rolled-up towels, decorative baskets, candles and new shower curtains. Be sure to replace any broken toilet seats and paper holders. New pillows that match the couch can be an effective thematic element. The goal is to highlight rooms for their intended purposes as places of relaxation and comfort.
  • Spend extra time arranging the kitchen, which some might consider as the most important room in a home. You might want to display a cookbook on a stand on a kitchen counter and have it open to a fun recipe. Also, a basket of fresh farmer's market produce on the kitchen counter can be the right touch. A blank dining room table might be perceived as boring. Instead, set it for a dinner party to create a wow factor when potential buyers see your beautifully arranged table.
  • Take advantage of your home's natural light. Open all curtains and blinds for open houses and add supplemental lighting where necessary. Lighten-up dark areas with floor lamps equipped with high-wattage bulbs. Outdated or broken light fixtures can be cheaply and easily replaced. Great lighting can make a home look warm and inviting.
  • Spruce up the landscaping. Get the lawn mowed and trees and bushes trimmed. Display a welcome mat and add potted flower pots to a walkway or porch. Maybe replace worn-out house numbers. Perhaps hang a hammock or add a bench swing in the backyard. A couple of folding chairs can help potential buyers envision themselves relaxing. You never get a second chance to make a first impression and the goal is to record high favorability ratings from the greatest possible pool of prospective buyers. While we’re talking about yardwork, feel free to raid the yard for fresh cut flowers, branches, clippings of fern fronds that can be displayed inside vases or as a centerpiece.
  • Smells count. Take care of bad odors with a spray to deodorize the home. Present inviting aromas by baking cinnamon-coated apples or slice-and-bake cookies in the oven, or by burning vanilla-scented candles. Another idea is to grind a lemon in the garbage disposal to remove sink odors.
These tips will not only give your listing a facelift, but your sellers are likely to see a bigger return on investment.

MLS Email Scam - Beware of fraudulent compliance emails!!!

posted Dec 28, 2017, 3:09 PM by Joyce Evans   [ updated Dec 28, 2017, 4:08 PM ]

A number of PSAR  members, have alerted us that they have received fraudulent emails from someone posing as a CRMLS Compliance officer. The emails are sophisticated phishing attempts and should not be opened. 

Here is how to know if the notice is fraudulent:

1.    The violation or warning does not come from compliance@crmls.org. Any legitimate violation or warning would come from that address. If you receive a CRMLS violation or warning from any address other than compliance@crmls.org, it is fake.

2.    The violation or warning cites this MLS number: BB17171684. Any legitimate violation or warning CRMLS sends you would be related to one of your listings.

3.    The violation or warning directs you to login to CRMLS. There is no link in a valid Violation Notice that requires a member to enter their log information.

Here is what to do if you receive one of these emails:

1.    Do not open the email. Review any violation/warning-related email subject line and sender address to determine its legitimacy.

2.    If the email is fraudulent, delete it.

3.    Under no circumstances should you enter any personal information into any site linked to a fraudulent email. Personal information includes your MLS login, credit card or bank information, or any other information you might want to be protected. CRMLS Violation Notices do not require that you login to CRMLS.

CRMLS is investigating the cause of these fraudulent emails and is experiencing a heavy volume of calls and other communications on this issue. Please do not contact CRMLS Support or CRMLS Compliance on this issue unless absolutely necessary. If you have safely deleted the fake email, we recommend you stand by for possible further communication on this issue.

How to Win a New Client: The Uncommon Approach

posted Dec 21, 2017, 4:47 PM by Joyce Evans   [ updated Dec 21, 2017, 4:48 PM ]

Here is the latest in a series of occasional articles by PSAR members on the topic:” How to Win a New Client.

By PSAR REALTOR® Member Reshia Guarnotta

I’m glad to share with our PSAR REALTOR® members a couple of ideas about winning a new client for life.

 

One of my favorite ideas I will describe as “Tell the World about the Most Exciting Property Ever.” The process begins with searching the MLS for that special listing. By special listing, I mean the house that you can get the most excited about. This type of property could be the home that seems to have it all or is undervalued. The next step is to contact everyone in my sphere and ask them if they know someone who might be interested in this rarely-available opportunity. I will tell everyone, “This type of home is so hard to find. A home like this doesn’t come available on the market very often, and I have to find a buyer for it cause it is just too cool not to!” Then, I will throw some of the sizzle features of it as my Facebook status, such as, “I found this crazy awesome house, the type that I hardly ever see for sale.” I likely won’t even disclose the address. 

 

Granted, the majority of home shoppers I contact will not be interested in that particular property, which is likely to draw multiple offers and sell for far beyond the listing price. Still, my efforts are likely to stimulate or reignite the conversation about real estate. In addition, my phone call will convey my own personal excitement about the real estate profession, create top-of-mind awareness and reinforce the message that I know value when I see it and can spot a good deal.

 

Another idea is to find a buyer at an open house. I love open houses. You will often hear me say, “All you need is one buyer for that open house to be a success.” Every person who attends an open house is a potential prospect. You likely will not sell them the house you are holding open, but you can use the details of the property to find out more of what they are looking for. I like to mention a property that I 
“saw this week” and see if it happens to match their search. I will set the appointment with them right then and there to show them that house. Even if I don't have the exact property in mind, I know I can find it. This idea works best when you research and preview the homes available in the area. Ask lots of questions to find out what the home shopper is looking for. And always, always have a property in mind, but don't give out an address. Instead, tell them you will call and make sure it is still available and that it does have everything they mentioned on their wish list. My main goal is to set-up a follow-up appointment later on and establish a new relationship.

 

Finally, another idea is to start the morning off with networking. I love to go to the PSAR “Rally and Ride” caravan meetings. It’s great fun to dialogue and network with other like-minded, successful professionals. Showing up makes you stand out and create top-of-mind awareness. It’s a great way to preview properties and talk up your listings or find the perfect house for your new client. Plus, for me, it’s a hoot because I technically go by three different names, “Tyreshias,” “Reshia” and “Ty.”

 

We work in a wonderful industry. It’s an honor to help people and a chance to do good. Every day there’s something new and I never stop learning.

#  #  #

 

Reshia Guarnotta was recently honored with the PSAR 2017 East County Broker of the Year award. In 2017, she assisted in the launch and has served throughout the year as co-facilitator of PSAR’s “City Pitch,” a weekly marketing pitch session for properties located within San Diego city limits. City Pitch is held at 9 a.m. on Tuesdays at Bash Boutique, 3821 32nd St, in San Diego’s North Park area.

Sandicor® MLS owners have agreed to a Memorandum of Understanding (MOU)

posted Dec 19, 2017, 4:10 PM by Richard D'Ascoli

SAN DIEGO, Dec. 18, 2017 – The three-member Associations of Sandicor® MLS have agreed to a Memorandum of Understanding (MOU) as the first step towards a resolution to realign their MLS memberships to service the best interests of their respective association members. Sandicor® MLS is comprised of North San Diego County Association of REALTORS® (NSDCAR), Pacific Southwest Association of REALTORS® (PSAR), and Greater San Diego Association of REALTORS® (GSDAR).

The MOU will be reviewed by a neutral third-party attorney who specializes in Association of REALTOR® and MLS representation to assist the parties in drafting a final settlement document. Although there are more steps that need to be taken before a resolution is reached, all parties involved support the details of this initial step which ensures that agent access to MLS information is at the forefront of the outcome. With this proposed resolution, NSDCAR and PSAR will join California Regional MLS (CRMLS), and GSDAR will operate as its own MLS. Each Association has acted with the intention of providing its members with the most valuable MLS products and customer service.

To ensure all members receive open access to as much information as possible, all three Associations have agreed to share data across both MLSs. MLS Subscribers will continue accessing MLS data and have the same level of access via Paragon, the software platform San Diego-area MLS users have been using for over three years, with no disruption of service. All three organizations have also agreed to keep the user experience the same for the members – the same look and feel that Sandicor® members have grown accustomed to will remain after the settlement takes effect for all members.

In addition to keeping the Paragon system in place for all agents in San Diego County, users will have access to all listings and sold data for the entire county as well. This resolution will provide each Association with their desired MLS outcome. As such, NSDCAR and PSAR will become members of CRMLS, and GSDAR will operate their own MLS, to be named SDMLS (San Diego MLS). The name SANDICOR, as a distinct brand in the San Diego marketplace, will cease to exist. Both CRMLS and GSDAR’s MLS will share the same Paragon system and will share their listing data with each other. It is anticipated to take at least 6 months for the new shared Paragon system to be built, but the new system will have the same design and functionality of the current system. The parties will continue to keep San Diego County agents updated on the settlement process.

“This is a win for members of each Association,” said GSDAR President Bob Kevane. “Despite the philosophical differences between Associations that led to a parting of ways, our goal is for all members to continue to receive the same access, the same data, and the same MLS platform we’ve all grown familiar with.”

Similar sentiments were echoed by NSDCAR Board Chair Michael Carunchio and PSAR President Sarah Heck. “We are confident this resolution will benefit NSDCAR members,” said Carunchio. “When all parties act in the interest of their users, it’s the agents and brokers who come out ahead,” added Heck. While the MOU is an expression of the intention of all the parties at this point, some modifications or amendments may be necessary in the future.

How I Saved the Deal: Don’t let cash buyers scare you away.

posted Dec 15, 2017, 3:06 PM by Joyce Evans   [ updated Dec 15, 2017, 3:18 PM ]

By PSAR REALTOR® Member Rafael Perez 

My client was determined to buy a home and return to the historic Downtown San Diego neighborhood where he was raised. But things had changed since his family had relocated due to rising rents. In the 1980’s, the community was known for many issues. There was evidence of drug users, liquor stores, transients, and debris. Even though some people were moving out, many community leaders stood their ground and things improved. Combine an improving neighborhood with nearby downtown development and increased demand, and the result was rising rents.

After having moved out of the community, my client was determined to return. After graduating from college and a credential program, he landed a job as a high school history teacher. He had saved for a down payment. As a first-time buyer, he had a good credit rating. He had calculated a price point he could afford. However, unfortunately, we had lost bidding wars to all-cash buyers on several properties on numerous occasions.

Then, he fell in love with a duplex property some would have considered as the ugliest house on the street. The owner was an elderly woman likely in her 80’s who lived with her special needs daughter. The house was full of stuff and was in a state of deferred maintenance. Major repairs, including severe foundation issues and a complete overhaul, were needed on both the home facing the street as well as the two-bedroom apartment in the back. The owner already had received several all-cash offers which were deemed too low because the proceeds were needed for the long-term care of the occupants.

Here’s how I saved the deal: I recommended FHA renovation financing, which enabled my client to offer another $40k higher than existing cash offers. My client was approved for an additional $150k in renovation financing. The seller was willing to wait for a longer escrow at a higher price. The seller also agreed to a seller credit for the buyer’s closing costs.

FHA’s 203(k) program and Fannie’s HomeStyle Renovation Mortgage have been around for years, but more REALTORS® should consider them. Renovation mortgage programs can offer cost-effective solutions for buyers and homeowners who want to renovate. In many cases, calculations are based on what the house is expected to be worth after the home rehab is completed. Also, if needed, homeowners can use programs to refinance both their existing mortgage plus the renovation costs into one loan.

In a standard FHA 203(k) program, the borrower will hire a HUD consultant to assess the construction plan and to perform an inspection before each draw is made. A “draw” happens when a portion of the money is disbursed to the contractor. Borrowers have up to six months to finish the project and are allowed up to five draws. With many 203(k) loans, borrowers can get up to 110 percent of the home’s appraised value.

In this success story, my client moved into the apartment in the back while his parents and siblings occupied the home in the front. The ugliest home on the block became the most beautiful. My client then became active in improving and enhancing his childhood community (now that he was a homeowner).

The best advice I can give to any REALTOR® who wants to save a deal in situations like this is to think outside the box when it comes to financing programs out there. It’s likely there’s a loan program available that can save a deal and make it a reality. Also, don’t let cash buyers scare you away when pursuing renovation opportunities. Ask around and become good friends with a HUD-approved home consultant who should know where to start and which lenders are experienced in handling renovation-type loans.

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