RISMEDIA, May 7, 2010—In today’s stringent credit climate, the process of securing a loan approval involves many details that can be easily overlooked by prospective home buyers. The 203k loan—an FHA loan that enables home buyers to purchase and renovate properties—adds a new dimension to the loan approval process. From finding licensed and trusted contractors to detailing the scope of work involved in the renovation plans, obtaining a 203k loan requires a special degree of knowledge.
So why not simplify the process? Well, that’s just what industry veterans Dennis and Teresa Walsh did last year by launching RE-buildUSA, a designation/membership program that turns agents into 203k Specialists.
Together with Lowe’s, the Walshes educate real estate professionals and prospective home buyers about 203k, most recently on the West Coast where Lowe’s recently launched its 203k initiative in a region that encompasses major metros such as San Francisco, Salt Lake City, Sacramento, Lake Havasu and Las Vegas.
“Lowe’s is partnering with RE-buildUSA to help facilitate the home-improvement needs of home buyers acquiring distressed properties,” explains Nick Mraz, Lowe’s regional sales director who works extensively on the 203k initiative. “The Walshes brought a real asset to the table…the 203k certification. It’s an asset to both an agent’s clients and to the community as a whole.”
Why It Works
The reason the 203k certification works is because it’s comprehensive training that offers an agent entrance into RE-buildUSA’s 203k program and online member center. The full program includes a Project Portal and access to marketing ideas and materials, blogs and forums and information on the program’s additional partners, such as Lowe’s, Oakley Sign, Pillar To Post, Merrill, Obeo and PODS.
“We’ve been working for a long time to build the technology platform to support the program,” explains Dennis Walsh, CEO of RE-buildUSA. “The way the program is structured, the real estate professional only becomes a member after completing the five-hour certification course. It’s only at that point that he or she gets full access to the RE-buildUSA Membership Center and Project Portal.
“One of the frustrations when working on a 203k loan is finding licensed contractors and handling the paperwork and financing,” adds Walsh.
From Lowe’s perspective, the program is a win for all involved.
“We fit in this scenario perfectly,” says Mraz. “Lowe’s is a perfect fit because we can help the lender by outlining what they need and help the customer by taking away the stress of trying to find a contractor or installer*, or both.”
Simple as Filling Out a Form
A key component to the 203k certification is access to what RE-buildUSA calls the “Project Portal.” It’s there that the truest value comes into play.
The idea is that once the agent has a 203k deal ready to go, the process takes just minutes to complete. From the Project Portal, the agent fills out an online form, which includes detailed information on the buyer and project. From there, once the offer is accepted, it becomes contingent on inspection, the submission of the scope of work and the 203k financing itself.
“It can be a challenging process for the average buyer or untrained agent,” says Walsh. “This was the reason we created the Project Portal. We said, ‘We really have to simplify this process.’ Using the Project Portal, our 203k Specialists can easily submit key project information in less than five minutes. That information then gets disseminated to our partners in the program to help expedite the process in a much faster and streamlined way.”
For example, once the Project Portal data is received by Pillar To Post, RE-buildUSA’s home inspection partner, the company immediately contacts the agent to conduct the home inspection, which, in this case, is designed specifically to meet the FHA standard requirements of the 203k loan.
“Their entire inspection revolves around making sure the home meets proper FHA standards and guidelines,” says Walsh. “While there, they’ll also make additional recommendations about repairs that may make sense to include in the 203k renovation. Rather than being confronted with costly repairs a few years down the line, the homeowners can roll these expenses into their mortgage at a lower cost and interest expense.”
While all of this transpires, Lowe’s is working for the client at the same time.
“Lowe’s contacts the customer immediately,” Walsh says. “The idea is to help them immediately begin the process of choosing flooring, cabinets, appliances, etc., so they can move quickly to the closing table. The product specialists at Lowe’s help customers finalize their choices, review their scope of work and ensure that each customer has all the proper documentation and paperwork needed for the lender to finalize the deal.”
Lowe’s also is able to track the customer’s 203k progress through the Project Portal to schedule appointments, access project data and coordinate communications.
All Points East to West…and Soon, in Between
Already a success in Florida, in late March, Lowe’s rolled out its 203k initiative on the West Coast, starting in San Francisco at Prudential California/Nevada Realty.
According to Prudential California/Nevada Realty President and CEO Ed Krafchow, Lowe’s and Re-BuildUSA rolled out the program to more than 120 agents at an event this past April. Of those 120 in the room, 94 of them signed up on the spot for the Walshes’ 203k training. For Krafchow, education in the 203k area is an essential next step for agents who want to succeed in the current marketplace.
“This company went through a process of certifying more than 1,000 agents as short sale specialists,” Krafchow explains. “We wanted to go into where the market is selling, and short sales are selling up a storm. We have to give agents tools and the ability to speak to people with good knowledge. We believe the 203k program is right behind short sales in terms of what the market will become. The Walshes’ 203k training will allow people to go into their communities and support people who really want to buy a house to get the house they want and have it fixed up and repaired at the same time.
“This rebuilding process is critical to changing the valuation process. Everyone knows that a house with recent repairs is more valuable than a house in disrepair.”
The event at Prudential CA/NV is just one of many to come as Lowe’s and RE-buildUSA continue to educate real estate professionals and consumers on the power of the FHA 203k.
“Our relationships with real estate professionals all across the country have really blossomed over the past year,” says Mraz. “We’ve received a lot of interest from people who have heard about what’s been happening with our program in Florida, so we’ll be moving pretty quickly this year to expand the program.”
Lowe’s is clearly ready for a larger rollout, having an already well-developed installation services department that boasts more than 10,000 installers nationwide who specialize in over 40 product categories across the store.
Down the Road
For the Walshes and Lowe’s, the ultimate goal is to make 203k education viral and have it spread through the people actually doing the deals—the agents.
“One example is that our 203k Specialist can use a customizable, consumer-directed PowerPoint presentation we provide in the Membership Center to put on their own seminars,” says Walsh. “Many have done this successfully with first-time buyers’ seminars. 203k seminars appeal to a broad segment of prospective buyers and are a great opportunity to drive more business.”
In fact, at press time, Krafchow’s company was getting ready to put on the first in a series of consumer seminars geared toward learning about the 203k loan.
“The nature of our relationship with Lowe’s is very positive,” Krafchow explains. “We’re planning on doing consumer-facing workshops based on the 203k program where Lowe’s will come in with samples, and consumers in the room will literally be able to pick out colors, fabric and tile…and then buy the house.”
“His company is going to have 203k-certified agents put on the seminar and have their local lending partners sponsor it,” says Walsh. “It’s a great way to inform the public, and also help loan officers and certified agents connect with consumers.”
*Lowe’s installers are licensed, bonded and insured. The company also stands behind the quality of its work with a 100% satisfaction guarantee.