Looking for Opportunities in Real Estate?

Guest Blog By Don O'Dell

There is little question that foreclosures are a major part of the real estate market today. One of the challenges that comes along with buying a foreclosure can be the condition of the property. If the property is damaged, neglected or just plain outdated, you may want to consider a renovation loan. Here are some simple steps when considering such a loan:

Get pre-qualified and consider a full pre-approval. This statement is true for any type of loan. If you are a well-qualified buyer, a pre-qualification is sufficient from the right loan officer. If you have a couple of issues that require review from an underwriter (loan decision maker), then get fully pre-approved. The difference is that with a pre-approval you supply your supporting documentation (W2’s, pay stubs, etc.) and sign an application disclosure package. The result is a loan commitment and much stronger negotiating power with sellers.

• Get organized. Once you find the right house and negotiate the contract the real work begins. For most buyers, you’ll need to turn your pre-qualification into a loan approval/commitment and lock your rate. At the same time, you will need to begin working with your general contractor(s) to specify the scope of work and cost of renovations. These need to be nailed down prior to ordering the appraisal so we can determine the “after improvement” value.
• Give plenty of time. Try to negotiate a 60-day contract-to-close period to give you and us the time needed to coordinate the financing and renovation. We may be able to close faster but there are many variables at play and you don’t need the extra stress of a quick closing.
• Be decisive. If you have trouble picking the toppings to put on your pizza, this may not be the right loan program for you. Identify what you want to renovate and make it happen.
• Consider hiring a HUD consultant. Usually HUD consultants are used for larger renovations and ones that include structural items. However if you could use help identifying the scope of work and working with contractors, a HUD consultant may be right for you.

Most importantly, work with a real estate and mortgage company that is committed to your success now and in the future.

What steps would you add to this list?