How to make 203(k) loan work in bay area

[Saurabh Pahuja]

Hello

I am pursuing a property that is a fixer upper. I learnt from my agent that putting a offer with 203(k) will get shot down immediately in this market.

Can you folks guide if I can get a conventional loan and later refinance that into a 203(k) loan?

Thanks
Saurabh

[Chris Mason]

@Saurabh Pahuja,

Yup agents hate 203k. Note that I said agents hate 203k, I didn't necessarily say that sellers hate 203k.

If it's a complete and functional home, you don't need to do 203k. You can buy w/ Fannie and refinance 203k once you move in.

If you want to do 203k on a purchase, that typically happens when you just stumble on a house that's a good fit.

• Been on market 60 days. Still on market, meaning flippers don't want it, meaning you aren't competing with them. Probably smells like cat piss and has foundation/roof issues.
• There are probably stupid lowball offers that the seller is getting. Listed for $500k and still on market, they've been getting offers for $300k and silly things like that.
• Yours is the only real offer on the table.
• Boom there you go.
• Seller: Great I finally got an offer and can unload this house. That $450k is better than the $300k! Hell yes I'll wait an extra month for $150k! I wanted that $500k, but after 60 days on the market I can live with $450k.
• A stereotypically bad agent (not all agents are like this, but some insight into why agents hate 203k): "waaaah im not getting paid for 60 days. why didn't my seller just take the $300k offer so i get paid sooner?!"
• You: Sweet, get to make it my dream house!
• So basically 203k can be a win/win for everyone involved, including the agents if they calm down about the timing and realize that 3% of $450k is a bigger number than 3% of $300k.

Make sense?