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Inspector Toolbelt Talk
A weekly home inspection podcast hosted by the founders of Inspector Toolbelt - the premier home inspection software. Get tips, insights, strategies, and more from our hosts and guests to help give your home inspection business a boost. Ian and Beon are property inspection and tech industry veterans with over 20 years of experience each. Sometimes they even stay on point :)
Inspector Toolbelt Talk
203K Consulting For Home Inspectors
For home inspectors (especially with construction backgrounds) 203k consulting might be the perfect way to expand your business while helping buyers transform fixer-uppers into dream homes.
As a 203k consultant, you become the linchpin of successful renovation projects. The process begins with a comprehensive property inspection to identify minimum FHA requirements, then expands to include client renovation wishes. You'll create detailed specifications of repairs with line-by-line cost estimates, evaluate contractor bids, and perform regular draw inspections to ensure work meets standards before payments are released.
The financial rewards are substantial—consultants earn $500-2000 for initial specifications and $375 plus mileage for each draw inspection. For those with solid construction knowledge and estimating skills, the hourly rate often exceeds standard home inspection fees. But perhaps the greatest reward comes at project completion, when you've helped transform "the worst house on the block" into something beautiful.
Ready to expand your inspection business? If you have construction experience, consider applying to HUD for a consultant ID. With many markets experiencing a shortage of qualified 203k consultants, this specialized service could become your most satisfying revenue stream.
Check out our home inspection app at www.inspectortoolbelt.com
Need a home inspection website? See samples of our website at www.inspectortoolbelt.com/home-inspection-websites
*The views and opinions expressed in this podcast, and the guests on it, do not necessarily reflect the views and opinions of Inspector Toolbelt and its associates.
Ian Robertson
Mike Marlow, welcome back to the show. How are you?
Mike Marlow
Good. It's good to be back.
Ian Robertson
I was just telling you before the show how excited I am to have you back on and especially the subject that we're going to be talking about today, which is 203(k) loans. And I'm just happy about this podcast all around.
Mike Marlow
Yeah, it's going to be a fun one.
Ian Robertson
So, you know, interestingly, you were on a few weeks back with our the use of the word "further" podcast. I don't know if you noticed. I love creating a little bit of controversy. Who knew that one little word was going to blow up the internet for home inspections?
Mike Marlow
I know, it just makes you think, what am I saying in my report?
Ian Robertson
Yeah, exactly.
Mike Marlow
And that's what it all comes down to, are you getting across the message that you want to convey, that you think you're conveying?
Ian Robertson
Yeah. And there was really no hard answer at the end of the podcast. There was arguments for both of it, and I learned something. So it was, it was a good podcast.
Mike Marlow
Yeah, so let's see what we can get, what trouble we can cause today.
Ian Robertson
Awesome. Hopefully we can get some controversy. So I'm excited about this one because this is something you are very much an expert in, and I am a complete newb. I'm not even a newb, I'm not even beginning in it. But 203(k) loans, completely different field that I have never, ever done. I've built 203(k) websites and pages. I understand the concept of them, but that's like saying I've built websites about colonoscopies, but I couldn't perform one. I understand the concept. Maybe that was an awkward illustration.
Mike Marlow
You don't have a borescope or a sewer scope.
Ian Robertson
Yeah, exactly. Sewer scope, same thing, right?
Mike Marlow
Exactly. And I have described it that way before.
Ian Robertson
Yeah, we'll start doing discount colonoscopies on the side.
Mike Marlow
Yeah, colonoscopy for your house.
Ian Robertson
Yeah, exactly. So maybe, Mike, you could start out for those of us who don't know 203(k) loans, I think the majority of our listeners do, just in case there are some that don't, what's a 203(k) loan? Just a basic overview.
Mike Marlow
Okay, so 203(k) loan. And just as a quick aside, that is an FHA product. There are also Fannie Mae conventional products and a VA product that are very similar. There's some different guidelines in them, but the overall process is the same. So you know, we're just going to say 203(k) today, just for simplicity. But what it is is a mortgage product that allows someone to either purchase or refinance a home, and the loan covers not only the the purchase of the loan, but you also finance the repairs that are needed. And these are a probably underutilized loan product, but they allow you to buy a house that is not perfect and turn it into a home that you love. So my first experience with this was back in 2010 when Jamie and I were transferring from Texas up to Maryland. And you know, the housing market at that time was still recovering from the crash and move in ready houses were at the extreme of our price range, and thankfully, our real estate agent told us, hey, why don't you look at, you know, fix your uppers and and check into using a 203(k) loan. At that time, I wasn't a home inspector. We were still active duty Navy, and, you know, we looked into it and found a fixer upper that was very rough. The pictures on my website are of that house, the before and after pictures, so you can see how rough it was. But, you know, we used the 203(k) to turn this into a very nice house, and we ended up living there six years, and, you know, got a nice little chunk of change out of it at the end. When my career in the Navy was over, my wife made me get a job. One of my friends was a home inspector, and he was also a 203(k) consultant. And that kind of led into, not only the home inspector career, but also becoming a consultant as well, because foreclosures were very prevalent in the Maryland area at the time. This is 2013 and so I did a bunch of them up there, and we just carried on the business down here in Texas. And, you know, Jamie, also a home inspector now, and a 203(k) consultant. And we have done, I don't know how many, but well over 100 of these that we've consulted on. So I keep saying that consultant term. One of the aspects of a 203(k) is that you have a 203(k) consultant, and that is someone like us that, we come in before you buy the house, and we do an inspection on the house. What we're looking for is FHA minimum property standards. What has to be fixed, is the roof shot. Is there structural issues, that's very common down here with foundations. Are we still dealing with knob and tube in this house, whatever. So those are the things that have to be fixed. So we figure that out, then we turn to the client and say, okay, so this is what we have to do. What do you want to do? Do you want that new kitchen? Do you want the new bathrooms? Do you want to put flooring throughout? Do you want to do an addition? There's a lot you can do with these loans limited basically by, you know, what can the house appraise for after the repairs are done? And what's your budget?
Ian Robertson
Gotcha. So are there specific intervals where you have to come back through the project? It's a multi-visit process, correct?
Mike Marlow
Right. So we are, I always say we're the only one that's with the client from start to finish. So ahead of time, we write up the specification of repairs, which is line by line. What are we doing to this house? And it gets as detailed as we're replacing 20 squares of shingles or 500 linear feet of space boards, or 20 feet of cabinets, whatever. We lay all that out, and we give a price to it. The contractor bids the project. We do a sanity check on that bid, yeah, or is the contractor way too high? Or even worse, are they way too low? Are they going to be able to do the project for this money? Once that's all finalized, the bank does their thing, loan closes, construction starts, and then when the contractor is ready to get paid, we go back and do a draw inspection, and we walk through that same specification of repairs. Okay, what did you do? Okay, you replaced the roof. Okay, we're going to pay you for the roof and on down through for whatever they've completed. A normal project is going to have up to five draws. I've had projects done in as few as one draw. Like, if it's just a foundation repair, then you know, the foundation company comes in, does their thing. Engineer signs off on it. We go back. Yep, foundations repaired. I don't feel like a drunken sailor walking across the floor anymore. Yeah. And so fill out the draw sheet. Everybody signs it, goes into the bank. Contractor gets paid. Projects done. Sometimes we're there five times. I've been there up to 10 times on, you know, really big projects. But yeah, we're there from start to finish. We go out for each draw inspection. The nice thing that everybody's probably asking about is we get paid for each of them.
Ian Robertson
Yeah, and that was going to be my question, because at the end of the day, if we're listening to this podcast, we're like, oh, you know, I'd like to do 203(k) loan inspections or consulting. You know, is it worth it? So does it pay well? Does it pay as well as a home inspection, hour per hour or?
Mike Marlow
It's getting better. The fees are set. The maximum fees on a 203(k) specifically are set by the government. Was it last year, last fall, they finally, like, realized that things had gotten a little bit more expensive and raised our fees so upfront for the specification of repairs, you know, if the project is, it's based on the amount of repairs, and it's a sliding scale. Starts at about 500, goes up to $2,000. I should have had that one up in front of me before we started.
Ian Robertson
That's okay, but that at least gives us an idea. It's not like, you know, when we hear the word draw inspection. Sometimes we think of like those mortgage inspections that pay 20 to $30 to go and take some pictures. This is much better.
Mike Marlow
No these are legitimate fees. Okay, so, and of course, the first one I look at hasn't updated their fees. There we go. Okay, so actually, it's 1000 up to 2000.
Ian Robertson
Okay.
Mike Marlow
And you know, it doesn't take a lot to get up into some nice money. The draws are 375, plus mileage each. And you can charge up to the government mileage rate, whatever that is. This year. I have to look it up every time I do a draw. And, you know, does it pay as much as a home inspection? That really comes down to how good you are at working out the initial specification or repairs. That's probably the thing that's going to take you the longest. If you know how to estimate, and that's the big key here, is knowing how to estimate construction costs. You know how to estimate, and you can write an SOR in two or three hours, and you're making good money. If it takes you 10 to 15 hours, then not so much. But that just comes with practice.
Ian Robertson
Yeah, well, it's kind of like your first home inspection. You know, are you going to get paid $800 for your first 1500 square foot home and get done in two hours? Probably not, you know you're gonna, I remember, I don't know, do you remember your first home inspection, Mike? I still remember mine. I fretted over that. I think I was on site for five and a half hours on this tiny, little 1300 square foot house, and I wrote my report for another like five hours at home. And, you know, just fretting over every word, every whisker of that home. Then you get better. You know, yeah.
Mike Marlow
Thankfully I was working for someone when I started out, so I had him alongside me.
Ian Robertson
Okay, see, I was just out in the wind.
Mike Marlow
Yeah, t wasn't that stressful, but it, yeah, it was interesting and it wasn't that quick.
Ian Robertson
No, and so I imagine this is better too, if you have someone to teach you how to do it. And don't stab me if this is not appropriate, but would AI be an appropriate tool to help us with these?
Mike Marlow
I don't know.
Ian Robertson
Okay.
Mike Marlow
I have not gotten very deep into AI at all. So I don't know the capabilities of it for something like this.
Ian Robertson
Well, I've done not a full SOR, which is a Scope of Repair, I imagine, is what that means. But I have used it for, hey, give me an estimate for how much this would cost in this specific area. And here's all my stuff for it, you know, like how deep the concrete is, and, you know, the spacing of this and that, and it gets okay, you know, it's not exact. I think you could probably fine tune it, but it's probably not exact enough for what what you're doing, but I imagine it'd probably help you get in the ballpark at least to give you a basis of it.
Mike Marlow
Yeah, I use estimating books, cost books, yeah, that are specific to region, or at least have region multipliers. So you know, especially for the stuff that, you know, the weird stuff that needs to be done on a house that I haven't come across before. And say well, I know it needs to be done, but you know, how much is this going to cost to do? It does take a little research sometimes to get that close.
Ian Robertson
Well, and you had mentioned before that it's..so not every home inspector has a construction background, and we were talking about this beforehand, it really helps if you have one is what you told me, correct?
Mike Marlow
Definitely. And that would be key to making an easy transition, being able to say you at least have the experience to know what goes into doing a certain task.
Ian Robertson
Well I can imagine, like, say, you're bidding a floor and like, okay, laying down the tile is going to be X amount of dollars per square foot. But you know from your construction experience, this floor was put in 1980 so it's going to have black paper under it, you're gonna have to take that off, and then the floor is going to need to get leveled. So you're looking at that going, it's not a matter of estimating how much square foot of floor needs to get replaced, but what's going to have to happen? What did the contractor dobefore that and after that, and what problems is the contractor going to run into? There's another guest on our show that we have all the time, Jay Wynn, he's always doing that to me, like, he'll, I'll be like, oh, yeah, we'll just do this. And then he's like, yeah, but if you get in there, you're gonna have these three things happen. I'm like, dagnabbit, and he's always right with it, you know? But that's construction experience, you know? Once you get your hands dirty and you start ripping things out, this is what you're gonna find.
Mike Marlow
Yeah, and, you know, you think, okay, rewiring a house, okay, you know, what's the panel cost? What's the wire cost, what's the receptacles cost, all of that. Yeah, also, what's the drywall repair going to cost? What's pre-painting a house after that going to cost? It's all of the second and third and on order effects that you have to consider.
Ian Robertson
I think about, um, contractors often estimate things wrong, because, you know, they leave themselves a little leeway. If I get in there and I find it, I'll just charge more. But, like, you know, you estimate for ripping out these walls and resheet rocking, but then you don't realize that it's horsehair plaster and laugh. You know, there's a big difference between ripping out, and if you don't have that experience with it, you're just kind of like, oh, these are just kind of some cruddy, cruddy walls, you know? So the average home inspector will know some of that, or most of it, hopefully. But at the end of the day, construction experience does help. It might slow down someone's transition into the industry, I would imagine, if they don't have that experience.
Mike Marlow
Yeah, and that's one of the biggest things is we have to remember that we're consulting just like a home inspection. We're consulting on someone's big purchase, and we don't want to screw things up, for lack of a better way to say it, yeah, tell someone, oh, yeah, this is $50,000 in repairs. They, you know, set their budget based on that. And turns out, well, it wasn't, it was 100 and you don't realize that until you're, you know, they already own the house and they're knee deep in renovation. That's not the time to do it. The other, like I was talking about sanity checks, the biggest problem we have is contractors under bidding to get the job, because they're used to that, oh, I found something. It's going to cost a little bit more. Well, this is a fixed price contract, and there is a contingency built into the budget, but that's for true emergencies. You know, you open up a wall and find hidden old termite damage, and now you got to reframe a part of a wall. That's a valid contingency thing. The contractor underbidding a foundation repair and nothing is changed, is not an emergency. That's a contractor screw up, and that's their problem, and that's one that I've had after I was kicking and screaming that there's no way this foundation is getting repaired for that amount of money, but the bank went ahead and overrode me and approved it, and sure enough, the first draw inspection, the contractor was there with his hand out, looking for basically doubling the money on the foundation.
Ian Robertson
So I mean, there's definitely high stakes in it, and so just objectively looking in from the outside of this industry. You know, I do some quick math. And maybe our listeners are doing some quick math. Okay, so let's say I do, you know, five draw inspections, and you know one, one inspection, where the initial one, let's say that's two grand, that's at the high end of it, and 375 for each draw. And let's say $25 just making even 400 for the gas that the federal government pays you. I mean, I'm thinking, okay, yeah, that's four grand. And there's some advantages. So I can schedule those times. So it's not like, I need to land this home inspection. They only have tomorrow at 2pm and you have to squeeze everything in and it's frantic. It's like, okay, I'm coming to do this after my last inspection of the day, or I'm coming on this time, so it's easier to schedule. But then there's also some high, I don't want to call it liability, it's high moral liability, like, if we mess up as a 203(k) loan,it's really gonna jack that person up for a good long time.
Mike Marlow
It could.
Ian Robertson
Yeah, so are there any drawbacks, like, what's the hard part of the job? Like, I don't like going back to a house to pick up a radon test after I do the whole inspection, because I don't like to see the seller. I can imagine showing up and you just have this turd of a contractor. You don't want to see him. He's making a mess, just those being the stressful parts. Or is it dealing with the banks or what, you know, what's the downside of it?
Mike Marlow
Each project is different. Have I had contractors that I wish I could fire? Sure. Have I had clients that I wish I could fire? Yep, of course. And sometimes, it's not in our job description as a consultant, but sometimes we do end up being sort of a mediator and having to look at it and say, yes, homeowner, the change order request for the termites in the wall is a legitimate change order that you should pay, you should agree to, or telling the contractor that, sorry, you underbid. I tried to tell you ,you didn't want to listen, but you know, here we are. This is a fixed price contract, so it does take a little bit of customer service, I guess, is the way to put it, but we've always gotten through it.
Ian Robertson
Is it more or less stressed in a home inspection or just about the same.
Mike Marlow
Nah, it's just different stress.
Ian Robertson
Yeah. Okay, so it doesn't sound that bad in that regard. Do you find that, well, let me ask you this first. Who do you work for as a 203(k) consultant, Mike? Your fees are regulated by the government, but the bank sends you there, but you have to talk to the client or the owner, and there's contractors to deal with. Seems like you work a little bit for everybody, but mostly the bank, is that pretty much it?
Mike Marlow
So, yeah, it is an interesting role. Yeah, the client is who's paying us, the homeowner. The bank is.. so I'd say our main clients would be the bank and the homeowner. For the bank, we are the eyes and ears for to make sure that the project is going as anticipated, because that house is collateral for the loan that they made, so they want to know what's going on, and we are responsible to the bank and the homeowner to not pay out for work that's not done or work that's done incorrectly. And had one where the, you know, a two story, great room was framed with two by four walls, single, two by four, 20 foot long. I don't know where he found him, but that's what he framed the walls with. And it was like, okay, again, tear all this down and start over.
Ian Robertson
You don't just buy 20 foot two by fours at Home Depot.
Mike Marlow
No idea where he got them.
Ian Robertson
Like, he didn't throw that on his truck either.
Mike Marlow
It was crazy. And yeah, of course, the clients wondering why everything's not quite square. I said well, there's a reason.
Ian Robertson
Yeah, I imagine that's when it gets really uncomfortable. Is like when you're saying, hey, you bought this place for 120 grand, and we're giving you a $350,000 loan, and this guy just built it wrong, like he can't build a wall, and you're trusting him with the rest of your house. I imagine things get a little crazy. Can they fire a contractor and hire another one to come in to work under the same contract parameters?
Mike Marlow
Yes, and that's how I got involved in this one. They had fired the contractor and the consultant.
Ian Robertson
Oh, they can do that?
Mike Marlow
On the job. And I came in, and that's when I saw that one and, yeah, that one is actually still in court.
Ian Robertson
Oh, okay.
Mike Marlow
Yeah, so that one went bad and there was really nothing, there was nobody that was going to be able to save that one at that point.
Ian Robertson
So let me ask you about the liability on it then, not that you're an attorney or we're giving anybody attorney advice or legal advice. But what's the liability like?
Mike Marlow
I don't know. I hope I never find out. I do carry an additional coverage for the 203(k) consultant side of things. But yeah, we'll find out here, yeah, hopefully soon, when, if this case ever goes anywhere against this previous contractor and consultant.
Ian Robertson
Okay. I mean, let's be frank, Mike. I mean, you and I have both been in this industry for a long time. There's liability in anything if you have that big of a goof up, you know. There's a court case around here where there was a trailer like, not a modern manufactured home, like a true blue trailer from like the 60s or something like that, and they built additions around it, And they sold it as a standard home. So I found out about this because I walked into a home with the same situation, and I walked up to the house and I go, this is a trailer with a bunch of additions around it. And they're like, no, it's not, no, it's not. And I walk in and I go look, and the one agent that was representing my client, she just stood there, and she walked outside, and I'm like, okay, so then I was just showing the seller's agent. I'm like, no, this is a trailer.This house is not worth a whole lot, you know, it's not even a good trailer. So they canceled the inspection, and the sellers actually were upset because they bought the house, but the agent told me outside, she goes, I literally just got out of court for this because my clients hired a home inspector, he popped his head up. You could see the roof of the trailer in the attic. He had to walk on it, and he just didn't report it. So the people went to sell their house, and she's like, I can't believe how eerily close to it this is. The people went to go sell their house, and now they took a big hit. And they sued the inspector, and they won. And I was thinking, I'm just like, you know, most of those home inspectors are like, oh man, I hate hearing about a home inspector getting sued.
Mike Marlow
He kind of earned it.
Ian Robertson
Yeah, he kind of earned that one, like, he should have been able to, and then I looked at pictures of the house, and I'm like, from the outside, he should have known, like, it wasn't, it wasn't like, this was like, oh, man, you couldn't tell. Like, no, you can tell from the outside on that one.
Mike Marlow
Yeah, yes. I had a few of those where you're inspecting a house and all of a sudden you find the the trailer in the middle of it that was built around and it's like, okay.
Ian Robertson
Yeah, well, it's a big legal issue around here. After that, I guess that was a big settlement, for years afterwards, this was a long time ago. For years afterwards, a lot of the brokerages around here would freak out if you said the word trailer or manufactured home.
Mike Marlow
We have a ton of manufactured homes in just the general area around us, yeah, and some of the additions do get a little bit creative.
Ian Robertson
That's a nice word for it, Mike.
Mike Marlow
Some of them are great. Some of them are not so much.
Ian Robertson
You know, that could be a whole other podcast about difference between the manufactured home and you know, all the wording that people use on these online listings, no matter what you call it. At the end of the day, a trailer is a trailer, and no matter how many additions you put around it at the middle of the house, is still a trailer that affects the value of the building and affects what you can do with it.
Mike Marlow
Yeah, and you cannot do a 203(k) loan on them.
Ian Robertson
That was my next question. You can't do one, huh? Why is that?
Mike Marlow
I have no idea why not, but it's just one of the things you can't do. There's restrictions on what you can do. Yeah, you can't do new construction, but you can move a house onto an existing foundation.
Ian Robertson
With a 203(k) loan?
Mike Marlow
Yeah, with a 203(k) loan.
Ian Robertson
Wait, can it be a new house? Like a...
Mike Marlow
No, it has to be an existing house that you wanted to move on to an existing foundation.
Ian Robertson
Oh, that's interesting. Okay, I wouldn't have thought of that one.
Mike Marlow
Basically, you can't do new construction, so if the city or whatever is saying, okay, you need to start pulling permits for new construction. Okay, now you're outside of the scope of it. They don't want the program to be for building new construction. FHA has different programs for that. This is for fixing up an existing home.
Ian Robertson
Gotcha. So I was at the InterNACHI convention in Orlando. I'm going to be there in Texas, by the way. Are you going to be there?
Mike Marlow
What, up in Dallas?
Ian Robertson
Yeah, the TPREIA. I always pronounce it wrong. If you are, come by the booth and come say hi. But I was in Orlando, and the booth right next to us was a 203(k) program. And they were nice people and stuff like that, but they had all these brochures and things to show you of how to get into the program and everything. And I remember thinking, I'm like, it seems like a low barrier to entry, but a high barrier of paperwork. Is that true? Or was that maybe just that booth? I guess I'm saying, if I wanted to get into 203(k) loans right now, what does one of our listeners need to do? Like, if they want to dip their feet in?
Mike Marlow
You'd have to apply to HUD to get a consultant ID. And, you know, the application process, you can go online to HUD and look at what it is, but you're going to provide basically, hey, this is my credentials. Yeah, I'm a licensed home inspector. I have this experience with estimating, construction, whatever, and then once FHA approves that, then you get your consultant ID, and you're now an FHA consultant. You have to renew it every two years. Sometimes the FHA or HUD reminds you, sometimes they don't, but yeah, just set a calendar reminder to send in the renewal.
Ian Robertson
Is there a fee?
Mike Marlow
No fee. Oh, really. And then you have to learn the process. And there is a ton of reading that you're supposed to do. You're supposed to affirm that you did that in the application too. But you know, the mortgage guidelines, all the mortgage letters about the program, all of that, and then, you know, there's programs and websites that you can use to do all of the paperwork. So you can fill it out in the format that's needed. And I use one of the websites that I can just poke in all the information and have it spit out whatever forms I need to send in. The biggest thing is the knowledge of the construction and the estimating. If you don't have that, you got a lot of studying to do. If you're familiar with that side of it, then it's just learning the program.
Ian Robertson
That makes sense. I imagine where people probably go wrong is the reading part, you know. There's a lot of us, come on. Let's admit it, some of us have probably taken one of those online courses with InterNACHI and skipped right to the end and took the test, you know, just to see.
Mike Marlow
We can't do that down here, we have seat timers on them for Texas, so that we're in there for the right, right amount of time.
Ian Robertson
Oh yeah. And New York State has timers, and they have proxies there to make sure you fill it out and whatever. But I'm just talking about, like, the InterNACHI courses. Sometimes I will skip to the end just to see if I can pass it, and then I'll go back and reread the information, because I'm an information wonk. I'm like, I want to know, but, uh, no, just joking around. But the information is going to be extremely important to understand how the process goes. Because a guy like me, especially my first one, you can't wing it and hope it comes out okay. You have to understand what you're doing, otherwise you really jacked someone up.
Mike Marlow
Probably the best thing would be to look for consultants in the area or even out of area, and get a mentor. I definitely had a few mentors along the way that I could reach out and say, hey, what the heck is going on with this, can we do this? How do we do this? Whatever.
Ian Robertson
So let me ask you, and this is kind of a broad question, how do you get your work, like, do you advertise to banks, or do you advertise to mortgagors? Or, like, how do people find out about you? Okay, to both?
Mike Marlow
All of the above. So, you know, we have the website, or at least a page on our website, dedicated to this program. That actually brings in quite a bit of business.
Ian Robertson
Okay, good.
Mike Marlow
We do have several mortgage lenders that we check in with frequently, hey, yeah, just a reminder we're here, and they send us business directly. I'd say we probably get about 50% of clients, home buyers, calling us directly, and then the other 50 are referred by either their mortgage lender or their agent.
Ian Robertson
Okay, so the the people that are contacting directly, that's going to be like internet searches and word of mouth and things like that, correct? Because I wouldn't imagine a lot of these 203(k) loans have high numbers on them, so that when they buy the property that the agents are recommending, and as much as the person going out and finding it on their own. Okay, I'm just running it through my head like how it would play out when somebody tries to hire a 203(k) loan consultant.
Mike Marlow
Yeah, unfortunately, some of the agents actually work against us and try to steer clients away from the loan, the renovation loans, because, oh yeah, I've been doing this 30 years, and we tried those at the beginning, and they took forever to close, and all of that. And it's like, that's the old 203(k) 15, 20, years ago. Now, if you know, if you have a good consultant, a good lender, you can close one of these in 30 to 45 days.
Ian Robertson
Oh, okay.
Mike Marlow
So it's not much longer than a regular mortgage would be.
Ian Robertson
Do the agents kind of not get as much commission? I mean, Iimagine they wouldn't, buying $120,000 house that's a fixer upper versus a $500,000 house that's already done.
Mike Marlow
Yeah, there could be a lower commission, but if that's what their home buyer wants..
Ian Robertson
Yeah, no, I know.
Mike Marlow
Yeah. Would they rather, you know, a client that can't get into something that is move in ready, and would therefore be a zero commission check, or, a commission check off of $120,000 fixer upper. Which would you take?
Ian Robertson
Well, that sounds like a really good office presentation, to be honest with you, is to how to turn a zero commission into a real commission, and how 203(k) loans can get you there. So if you have potential buyers that can't afford the home, get them into these 203(k) loans. And then, you know, and you can also talk to them about, hey, they're a lot faster than they used to be, in as little as 30 to 45 days you can have these closed. So I imagine that would be a good office presentation, or even like first time homebuyer presentations that sometimes agencies will put on. You could talk about it in those.
Mike Marlow
We do have a CE class for real estate agents, specifically on these programs to educate them on what renovation loans really look like today.
Ian Robertson
Mike, this has been really interesting for me, and I gotta go talk to one of my friends here, about 203(k) loans now, because I'd really like to dabble in it a bit here, or get into it, not dabble. But if you were to leave everybody here at the end of our podcast with some advice about the 203(k) loan that you wish somebody had told you when you had gotten into the consulting side of things, what would it be?
Mike Marlow
The biggest thing is be strong on the estimating, that is where you're going to have the biggest hiccups. Don't be afraid to reach out and do your research to get the numbers right. So that's the biggest trip up that you're going to see on this program, and the ones I've seen where I've been called in to save it. That's been the root cause of the issue. If you don't have that background, you know, maybe this isn't the right thing to look for. But you know, I know we have a ton of home inspectors that came from, yeah, from the trades, so hopefully they know how to estimate and how to do, how to manage a construction project. So that might be something that they want to look into. Because there's, yeah, there is a lack of 203(k) consultants in large areas. It's not something that you're going to make a whole career on just doing that. There's some people that have but few and far between, but it is a nice add on. And you know, there's nothing like the the feeling at the end of a project, when construction is done, you go to do that final draw, and you're talking to the homeowner, and you say, so what do you think? She's like, oh, I love it. It's great. It was rough, you know, getting through the construction. Sometimes they want it to go faster, but once it's done, it's like, yep, this is what we wanted. And now they have the nicest house on the block when they bought the worst house on the block.
Ian Robertson
You know, it's funny that you mentioned that feeling of satisfaction, because that's one thing that I do miss from my contractor days. You know, when you drive by the job and you collect your check, and you're just talking with the homeowner, looking at the great work and moving on. Whenever we walk away from an inspection, we actually leave people with a big headache, like, nobody's ever really that thrilled when we're outside. So you know, as you were talking, I'm like, I missed that feeling. And actually, there was an inspector friend of mine, we were talking the other day, and we're like, you know what? I miss that part of things. I miss helping people and then looking at a job well done and leaving with people happy. In home inspections, it's a great industry. We love it, but you know, sometimes it's nice to mix it up a little bit and and have an opportunity to say, okay, I've left you with a beautiful home that I helped you get through instead of here's a report of all the stuff that needs to get fixed. Well, this sounds like a great add on service, and it sounds like there's also openings in the industry as well. As you said, there are large areas that don't have enough 203(k) loan consultants. So if anybody's listening is interested in 203(k) loans, I say, give it a try, especially if you have a construction background, as Mike said, that estimating is really where things are going to get really awesome or really sticky pretty quick. Yeah, Mike, as always, listen, you took time out of your day, out of your busy schedule, I know you're anextremely busy inspector, to talk to us about this stuff. I can't thank you enough for you sharing your experience and your knowledge on this niche part of our industry. So thank you so much as always.
Mike Marlow
Oh, you're welcome.
Ian Robertson
You're awesome, and everybody, we'll talk to you again on the next episode of Inspector Toolbelt Talk.
Outro: On behalf of myself, Ian, and the entire ITB team, thank you for listening to this episode of Inspector Toolbelt Talk. We also love hearing your feedback, so please drop us a line at info@inspectortoolbelt.com.
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*The views and opinions expressed in this podcast, and the guests on it, do not necessarily reflect the views and opinions of Inspector Toolbelt and its associates.
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