Getting Creative in a Sellers’ Market, Part 2

A thousand people a day are moving to Florida, looking for the right house to call home. Add to that the number of Floridians needing another bedroom or a better school district or a mother-in-law suite. There just aren’t enough perfect-fit homes to go around.

If you’re trying to buy a home, you know the story. Homes in good condition and priced right are under contract in days, in some cases just hours. Offers are coming in over asking price. It’s a fast-paced sellers’ market, and realtors are working hard to get their buyers’ offers on top of the pile.

Buying with a Different Mindset

But maybe you have some vision and decide to relook at those homes on the market for a little longer— say 30 or 60 days. Maybe you can picture that three-bedroom, one-bath home as a two bedroom/two bath with a nice master closet. Maybe the kitchen in that 40-year-old home isn’t so bad after all. An island, new countertops and a cabinet reface could make it look brand new. Just think how the grandkids will enjoy the unfinished bonus room after some TLC, a little drywall and kid-proof carpet.

 I can hear some of your objections. After you buy the house, where is the money for that extra bathroom coming from? After I’m in the house, do I want to go through all the paperwork again to qualify for a loan to transform my dream kitchen? How can I ever afford new windows and a roof for a 1930s farmhouse?

Home Renovation Financing

Enter Renovation Financing! With a creative eye and a little extra work upfront, you and your general contractor can turn any house into the home of your dreams. The first step for a Renovation Loan is to qualify and get pre-approved, the same way you do for a conventional or FHA loan. The difference is you will be qualifying for financing that combines the price of the property and the renovations in one loan. That combined price determines the amount of your required down payment.

Once you know how much home you can afford, you have a wider market than the buyer who only wants to look at move-in-ready houses. I was surprised at all the possible renovations besides kitchen or bath remodels. You might want to think about structural alterations or adding a garage. Energy conservation improvements, interior and exterior painting, updating the roof or AC, even adding a pool are all possible with a correctly structured renovation loan.

 You can expect some extra fees for a consultant, ranging from $400 for small repairs up to $1,000 for renovations over $100,000. Your consultant works with you and your contractor to come up with a detailed bid. The mortgage company will want your contractor’s license, proof of liability insurance and references. If you need to, you can hire up to three contractors—say a plumber, an electrician and a roofer.

Maybe you’re considering selling your own home, and it needs some renovation. You might consider brainstorming with a contractor and costing a project or two. It might be just the idea your home’s next owner needs to make it their own.

If you’re curious about your home’s value, you can get a quick comparative market analysis right here. If you think a Renovation Loan might be right for you, please click here to get in touch, and I’ll introduce you to the people who can help.

Photo from Terri White