203K Dreaming

This week we are pleased to bring you a Guest Blog post by our Real Estate partner, Julian Jackson of eXp Realty!

A property comes for sale on the market.  You are an excited potential homeowner, with big dreams.  You receive an email, from your trusted real estate agent, telling you that this house with great bones is on the market for $100,000, and the first thing that comes to mind are all the possibilities.  You start thinking about a beautiful 3 bedroom, 2 bathroom home with gleaming hardwoods.  Come to think of it, didn’t you just watch that HGTV flipping show episode where the couple budgeted on a budget for something close to nothing, and fixed a whole house?  This is where the paths diverge from HGTV and real life.  

If life was like HGTV it would be so much simpler.  A nice couple has a General Contractor visit the home. They spitball some pricing estimates so the couple can place an offer on the home.  The lovely couple turns in a cash offer on the home and the flipping process begins.  They come to the house fashionably dressed up, and decide it’s time to do some demo.  30 minutes later, the house is finished, the couple is smiling and all is well.

Let’s make some changes and turn this show into a real life scenario.  You are looking for a home to purchase with a 203k loan.  After searching on the MLS system one morning you find “THAT” house fitting your criteria.    You call your real estate agent and you schedule an appointment to view the home.  You look over the home and decide it’s the one.  It’s Write-Up Offer time!  Guess what?  It was a multiple offer situation, and you won out over the other 5 offers.  You now have the home under contract.  It’s time for you to get a trustworthy general contractor to give you a scope of work on the home.  After the general contractor gives you a scope of work, the offer price of the home and the repair cost must be 110% of the After Repair Value given by the appraiser.  If the scenario works, you close on the home.  If the numbers don’t work, you must start again. 

But let’s say it works: Yay!!! You have closed on the home.  Let the good times roll!  It’s now time to get your contractor to come start the work.   It’s my hope that you have found an awesome contractor you can trust to do the work permitted, and up to code. You can seek references from your agent, your lender, yourhomebuyer education agency, friends, family, etc. Just get a good recommendation!

Very Strong Side Note:  I would strongly recommend you speak to someone knowledgeable about paying a contractor.  In recent memory, I have spoken with multiple people that have had the contractor and/or subcontractor run off with thousands of dollars, and no rehab that was paid for.  You MUST protect yourself.  Get references.  Check them twice.  It will save you many sleepless nights.

You're invited to learn more about Julian Jackson, his business endeavors, and contact him directly for services via the following links: