Monday, May 4, 2015

How Can I Close My Renovation Loan Faster?

What is it that takes a 203k or renovation loan so long to close escrow? The short answer is that everyone in the transactions is looking at the consultant, emailing and calling, distracting the driver so to speak. It is like a magician, lets take your eyes of the real culprit by making you look at the consultant. Everyone thinks the secret it to call or email the consultant... NOT. In fact this actually hurts and hinders the very person who needs the time to achieve the desired results.

I always go back to Donna Nix in Columbia South Carolina. She busted her back getting her end of the 203k paperwork completed and let the other professionals working on her team do their due diligence without a single call or email knowing it would all come together and closed her full 203k loan in 21 days... asking "why does everyone say they need 45-60 days?"

I guess it would be confusing for someone who just  did her first  203k in 21 days, Donna is one of the few that understands how a TEAM actually works. Let it work for you.

I know, your lender always takes 45 days, yes, that is a sad fact but there is one very large lender that won't let them close faster than that and it is frustrating for the LOs working for that company because the company will sit on it so as not to create a "habit" or "expectation" that they can be closed faster.

We work  with another large company where the company policy is to say "45 days to close" for another reason. They actually close them in 28-35 days all the time but they set the expectation at 45 and are hero's when they close in 28-35 days. On the other hand had they told you 28 days and took 29 you would be angry with them. Funny how that works. Expect 45-60 and you will be happier most of the time.

What can you do to insure your loan closes at the shortest possible time frame? Simple get your consultant involved sooner in the process. Many lenders will get your client paperwork started, they have already pre-qualified them, so there is little need to drag getting the consultant involved.

The process as designed should be to get the consultant out there first... FIRST, we work with the borrower and create the "scope of work" that becomes what the contractors will all bid so they are all bidding from the same list and not from a casual walk through with the borrower where each hears what they want to hear and bids according to what they think they heard. Once we write it up the bids are going to be more uniform in their presentation.

In the case of a streamlined k loan the toughest thing to realize is that though a consultant isn't required, it is smarter. Contractors typically take a week or two to get their bid together, by using the consultant as a "contractor helper" we bid the job faster and then bring you a contractor who can do it for that amount. Yahoo. you close streamlined k loans faster too. In this scenario you don't pay the consultant, the contractor does. Streamlined k loans comprise 98% of the problem 203k loans and it is because it is a "do it yourself" process and you haven't ever done one.