Those familiar with the FHA 203k have probably heard plenty about how borrowers benefit from the FHA 203k. And while it is true that there are great benefits to potential borrowers, it is not only them who benefit. Sellers, contractors, and realtors all also benefit from the FHA 203k program. For sellers in particular the FHA 203k could be huge.
Here are just some of the reasons why home sellers ought to consider the FHA 203k when selling their homes:
1. No more inspection concerns (items corrected after COE- close of escrow)
One of the first steps involved in the 203k process is hiring a HUD consultant, or 203k consultant, to visit the property and complete a Feasibility Analysis. This report highlights the required, recommended, and desired renovations. The fees are covered by the prospective buyer and offers invaluable information that will bring transparency to your property’s condition.
2. More buyers will be attracted to their property
Because the FHA 203k creates flexibility for both the homebuyer and home seller, the pool of potential buyers will increase. The 203k offers an opportunity for borrowers to get into a home and customize it the way they want for a price that they can afford.
3. Appraisal concerns practically eliminated (improved appraised value + 10%)
Due to the nature of the FHA 203k process, appraisal concerns are practically eliminated. A borrower utilizing the 203k already has renovations in mind which will increase the value of the property with little or no additional out of pocket expense.
4. Current property condition does not have to meet FHA’s property standards
The FHA 203k requires the borrower to first fix and bring the property up to FHA standards. They can then add different wish list items to the list of repairs. This means the homeowner (home seller) does not need to invest money into the property.
5. Seller not required to repair anything prior to COE
Just like #4 the 203k puts the burden of repairs on the borrower.
6. Transaction will close with property in its “as-is” condition
Some people have heard the myth that the FHA 203k holds up the loan closing and does not allow it to close until all of the renovations are complete. This is a false claim about the 203k. The loan will close first and then the renovation work will start.
7. Loan closing will take about 45 days
On average, a conventional loan takes 30-45 days to close. The standard FHA loan takes only around 45 days to close. For the flexibility that the 203k creates for the seller, an additional couple of weeks to close is still a blessing.