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Anthony Grasst, Vice President,
Builder Division, HomeStreet Bank
Coaches Corner
Create a sales culture in your organization.
Selling isn’t a dirty word…it’s about making
the best of what you have available to your
clients.
—See page 15
Your
Business
BUILDING
BUSINESS TIPS • SALES/MARKETING • REMODELING • SUSTAINABILITY •
FEBRUARY, 2013
•
PAGE 11
HBA
News
HOME BUILDING
HBA
PDX
.
ORG
BIZ
TIPS
By Jon Bell
For the HBA
It’s not just in home building
and home buying that lenders
have begun to see a pickup of
pace. Remodeling projects —
and financing for them — have
also gained some steam and are
helping to fill their plates as well.
“We are seeing lots of remod-
eling,” said Zack Duncan, a mort-
gage advisor with Cobalt Mort-
gage in Lake Oswego. “People
are really looking to add square
footage and livable space.”
And when it comes to financ-
ing for a remodel, homeowners
and buyers have several different
options, from more straightfor-
ward home equity loans or lines
of credit to the Federal Housing
Administration’s little-known
203(k) loan, a program designed
specifically for remodels — and
one that has seen some renewed
popularity lately.
“That program for us was up
double digits last year,” said
Anthony Grasst, vice president,
builder division for Home Street
Bank. “It’s really gone up sub-
stantially.”
With a 203(k) loan, consum-
ers can purchase a home or refi
an existing home to remodel or
rehabilitate it all with the same
mortgage. Through the pro-
gram, which some buyers and
homeowners have used lately to
purchase and rehab properties,
a prospective borrower usually
works with a remodeler, design-
er, architect or general contractor
to determine what work needs
to be done on the home. The
program covers both structural
repairs and projects like kitchen
remodels, painting, hvac, decks
and more. A streamlined 203(k)
allows for repairs up to $35,000,
while a full 203(k) can go up to
the allowable $417,000 limit in
Oregon.
“There is room to borrow quite
a bit,” Duncan said.
He said the next step is for the
bank to send out an inspector
and an appraiser to come up with
a figure for the loan amount. The
loan amount is based on what
the property will be worth once
the renovations have beenmade.
“So the bank is kind of lending
money on a vision or an idea,”
Duncan said.
Funds for the renovation proj-
ects are placed into an escrow
account and accessed as needed
to pay contractors. The work
must begin within 30 days of the
closing of the loan and be com-
pleted by the deadline set in the
loan agreement, no longer than
six months.
While the 203(k) loan may be a
good option for some homebuy-
ers, Duncan said the programhas
a reputation—and a well-earned
one — for being complicated,
convoluted and time-consum-
ing. Cobalt has been offering the
loans for a little over a year, and
Duncan said it has taken time to
find the right team to work with
to smooth out the process.
In addition to the 203(k) pro-
gram, Duncan said he’s seen a
lot of clients remodeling either
by using a home equity loan or
line of credit or through a cash-
out refinance. For some home-
owners looking for a simple way
to finance a remodel, borrowing
from a 401k is another option.
Fannie Mae also offers renova-
tion financing somewhat similar
to the 203(k) program through
its HomeStyle Renovation and
HomePath financing programs.
And still one other unique
possibility — an alternative to
the 203(k) option —comes from
Willamette Valley Bank. Known
as a Fund and Fix loan, the pro-
gram applies to certain proper-
ties that are in need of rehab;
many of them may need to be
sold as cash-only or as fixers on
RMLS. The program is similar
to the 203(k) or the Fannie Mae
programs, but Theresa Springer,
a senior loan officer in the home
loan division of Willamette Val-
ley Bank, said it’s not nearly as
complex and its timeline is much
shorter than other programs.
Whereas the 203(k) process can
be “fairly onerous” and the Fan-
nie Mae programs can find Real-
tors waiting months to be paid,
Springer said Willamette Valley’s
Fund and Fix operates on a much
shorter and simpler frame. The
bank pays for an appraisal, usual-
ly arranges for a contractor, then
gives three weeks for the rehab
to be completed. Rather than
waiting between two and five
months to get paid, as is often
the case with other programs,
Springer said the Fund and Fix
program allows Realtors to be
paid in as little as three days.
“It is a totally unique program
only from Willamette Valley
Bank,” she said. “It’s a big deal for
the real estate community.”
FINANCING OPTION$
This remodel by Cascade Restoration & Remodeling
to be seen in the upcoming Tour of Remodeled
Homes is a classic ranch total makeover. New
features include a gourmet kitchen, beamed ceil-
ings, stone fireplace, hardwood floors, central vac,
heated tile floor and Sonos sound system.
How has financing impacted
your business in the past three to
five years? If this question makes
you nauseated, then you are quite
aware of the problems so com-
mon with today’s lenders. Missed
closing dates, angry buyers, ap-
provals that aren’t approvals, the
extra interest expense associated
with the missed closings, reduced
spec lending, internal cash flow
concerns, and the stress on your
staff. It is no surprise that when
new home buyers are surveyed
the one area of the sales process
that receives the lowest satis-
faction ratings is always financ-
ing. Ironically, according to Tom
Ritchie longtime new home sales
trainer, over one third of the “buy
decision” is based on financing.
Moreover, most sales teams will
tell you that they are least com-
fortable discussing financing with
potential buyers. With so much of
the decision and buyer satisfac-
tion riding on your financing, why
wouldn’t you want to take control
of it?
The key to turning financing
into a tool that creates sales, im-
proves cash flow, and is additive
to your brand and sales experi-
ence is requiring your lender to
be a business partner and not a
vendor. All too often in our busi-
ness, lenders operate as vendors.
This commonly comes through
in such statements as, “we have
great rates and programs and
close all our loans on time!” Hav-
ing a lender that waits for a re-
ferral or just drops off informa-
tion does not understand the
importance of their role. A busi-
ness partner on the other hand,
brings sales ideas and solutions
that help with the sales process.
They are integrated into the
selling process as well and are
part of the initial follow up and
reporting. In addition, they par-
ticipate in your sales meetings,
not to bring product details, but
to work with your sales team on
how to communicate with buy-
ers. In addition, they should of-
fer regular training to your sales
team. Simple things like teaching
the sales team how to introduce
financing, how to dialogue with
buyer and how to make a smooth
Why a preferred
lender can and
should increase
your sales
See BIZ TIPS/ page 12
New monthly feature:
Cool Tools!
New and useful cool tools and apps recommended
by members of the HBA. Got ideas for future
editions? Let us know!
—See page 12
Also showing in the upcoming Tour of
Remodeled Homes, SLS Remodel & Addition
added a second floor for crafts and storage,
including new skylights and 500 square feet
of new space incorporated to the design of the
home for this remodeling project.
for rehabbing and remodeling
MARK YOUR CALENDARS
Tickets go on sale at the
Spring Home & Garden Show
on February 20!
TOUR OF
REMODELED
HOMES
Presented by