Important Considerations for Contractors under the HERE Model
This structure creates tremendous opportunities for Contractors, Realtors, Loan Officers, HERS II Raters, and others. Taking advantage of this unique opportunity is dependent upon a cooperative alliance among these sectors. Just as there are some things that these other strategic partners must understand to support your efforts, it is critical that you also appreciate and accommodate their particular needs and constraints.
This is a virtual no brainer for a buyer who is using FHA Financing to purchase their home. If just 95% of last year’s Sacramento County FHA financed sales on houses built before 1990 had participated in this opportunity, with an average of just $10,000 in retrofit work, this would have resulted in over $28 MILLION in retrofit work. That is a very conservative number since it doesn’t include any of the refinances or houses built after 1990 that would have benefited from this also. Since a lot of people would have used this opportunity to do more extensive retrofitting, even that average of $10,000 per house is likely very low.
There have been some undiscovered components to the SMUD Home Performance Program and the other ARRA based programs that I am revealing to the Realtors here that will make them very motivated to promote this within the community. In fact, only one constraint would prevent them from overwhelming you with work. That would be if you were either unwilling or unable to accommodate the processes that would allow them to remain within their contracted closing date commitments. This would make it impossible for them to support this opportunity. If contracted closing date commitments are not met transactions sometimes fall apart and buyers lose houses.
Ultimately, the referrals will go to the Contractors that make it possible for the Real Estate Community to use their services by appreciating this urgency to get bids returned.
When an EEM is used as the Buyer’s energy financing mechanism and a Facilitator is involved they typically assist with that paperwork. If a 203K or Streamline 203K is being used you will need to deal with the paperwork involved yourself (I have included copies of these forms on this site). I should mention though, that the EEM Facilitator I most commonly work with has agreed at times to play this role on Streamline 203k’s when Contractors have requested this. There may be other Facilitators that would be open to this as well.
One significant advantage under any of these financing structures is the money for the work is being funded by the lender not the homeowner. You should always get paid.
The biggest key to allowing the Realtors to support this process is to appreciate that the bids must be turned very quickly. Without this information many parts of the loan process cannot even begin. The Contractors who have consistently received a lot of referrals over the years for EEM’s and 203K’s are the ones who understand and support this need to get the bids back right away.
Please Note: Although a HERS II Rating is not required for the HPP, it is required if the buyer is financing these upgrades with an Energy Efficient Mortgage. HERS II does not specifically require a physical Blower Door or Duct Blaster Test be performed, default Values are permitted. However, SMUD is requiring these physical tests to be performed if their $99 subsidized HERS II rating program is being used. I have made it very clear to the Realtors that you must also perform these physical tests and the results are affected by environmental conditions including Air Temperature and Wind Speed. They are being directed to make sure that the buyers are very clear that this can occur and that only the Whole-Home Assessment results are considered for the HPP Rebates. This should reduce the conflicts that could arise and the assumptions that could be reached if there is a variance in those results.
Ultimately, I think you will find that the Realtors, Loan Officers, and everyone else involved is interested in being productive and efficient just as you are. When they understand what they can do to make any parts of your role in this easier for you I believe you will find the majority of them to be very accommodating. Many of them are not that familiar with the EEM, 203K, or Streamline 203K products. You may need to be a little patient with them as they figure these out, but I am attempting to provide them with everything they need here to help ensure they can come up to speed very quickly.
Sacramento 1st DBA Comstock Mortgage – Lic : 01390474
Kevin Nunn – NMLS 305826 / DRE 01158674
