Top-producing agents differentiate themselves by providing their developers consulting advice prior to the construction phase. Agents provide crucial information that can ensure the development meets all lender guidelines, so that sales can close once construction is complete. Here are three key pieces of advice you can provide your lender during new construction loans:
• For new construction condos, get the lender and developer to talk with each other as early as possible. A good building that’s priced well still won’t sell if the legal documents, budget, etc. aren’t correct right out of the gate. Getting your preferred lender to approve condo docs in advance will save a huge amount of hassle when the units are ready to close. It also makes you more valuable to your developer.
• If the units are priced in the range of VA or FHA, consider getting the building VA- and FHA-approved. Set enough time aside early in the process (probably three months before completion) that VA/FHA financing can be available out of the gate. The developer or your lender will have to put in extra time and paperwork, but it pays off in early marketing efforts. If the lender knows they will have opportunity to finance the units, they will probably do this legwork for free.
• Don’t forget about pre-sale requirements. Fannie Mae is getting more flexible with approving buildings that have reduced pre-sales, but you still want to plan on 70 percent of the units being under contract to owner-occupied buyers before closing conventional financing.
PERL Mortgage offers pre-construction phase consultation with developers. Sharbel Shamoon is seasoned in managing the process of these meetings between agent/developer/lender. Please reach out to him with any questions or needs at 312.376.3760.