Building Inspection – a Requirement by NeighborWorks
Building inspection is one of the requirements of NeighborWorks in its PEARLS program before a foreclosure home is purchased for the program.
PEARLS stands for Purchase Efficient Affordable Homes and Rehab, Lease and Sell. The homes acquired under the program need to be rehabilitated well before they are sold or rented out to families that cannot afford to buy homes without help from other parties.
It was last year that NeighborWorks started purchasing foreclosed houses, fixing them and then renting them out to families who do not yet have the capacity to own homes, but who can work towards home ownership in the near future. The scheme is similar to the rent-to-own or lease option schemes being offered by other developers to potential homebuyers.
According to Roy Nash, CEO and president of NeighborWorks, it has already acquired 20 vacant foreclosed homes in the Waco metro area in Texas and all of them are already occupied or are being prepared for move-in.
Nash said that the repairs and other construction work have been stretching the budget for the homes, but efforts have paid off. He added that the selection process for the purchase of foreclosed properties is stringent in order to maximize its funds. Every home acquired by the program must first pass a building inspection process conducted by the construction unit of NeighborWorks before it is purchased.
For instance, in McLennan County, Texas, a foreclosure company offered more than 127 foreclosed units, but NeighborWorks chose only a few. Nash explained that the nonprofit has been choosing the units with the best potentials to reduce repair costs and to ensure the homes have great values for renters and homebuyers.
Based on a report from the Real Estate Center of Texas A&M University, the city of Waco is a good market for rentals because the home ownership rate is only around 43 percent, much lower than the national home ownership rate of 67 percent.
To help renters prepare for home ownership, NeighborWorks conducts home ownership sessions that enable participants to learn about credit, financing, insurance and home buying.
If the renter is ready to buy the house under the PEARLS program, NeighborWorks provides a zero-interest loan to help the renter make the down payment.
According to Nash, the PEARLS program has a very low default rate because of the firm operational systems and strict building inspection policies of NeighborWorks.
