Habitat for Humanity Homes – A Hand Up, Not A Hand Out

“Will we ever have a regular house?” the girls asked their dad.  

Knowing they couldn’t really afford one, he said “Let’s pray,” and they did.  The next day,  Sisco’s employer asked if he had ever heard of Habitat for Humanity…. and so began the journey that led to Sisco’s family getting their very own, ‘regular’, house.  

Their own home, and just in time for Christmas.

 

Habitat for Humanity fills an important need in our community, THAT I have always known… But how?  When my clients began this journey there was much I did not know about the organization.  Perhaps you’ll be surprised to learn some of what I learned, too.  Read on….

A lot of people mistakenly think that someone who “receives” a ‘Habitat for Humanity’ house is getting a free house.  But that simply isn’t true.  Last year, when Sisco’s family was selected to receive one of these homes, I was honored that he asked me to help him through the process….So into the trenches I went with him.  I was quite surprised when I learned how Habitat for Humanity really worked, from the buyer’s perspective.

1. Sisco was initially referred to Habitat for Humanity by his employer, Bill Anderson, who frequently works with Habitat for Humanity.  Sisco completed an application which tells his story, about his family and about their income history.

2.  If the application meets initial criteria, the application is processed.  The processing includes all the things you expect any housing application would include, and then some…. Credit checks, income verifications, rental histories, personal references and even multiple home visits (& “inspections”) by committee members, along with a face to face interview.   The process is explained to the applicant… and there are requirements.  Getting a home from Habitat for Humanity is a hand up, not a hand out.

• Applicant families are required to pay an earnest money deposit.  It may be as little as $1,000 and it may be made in installments if needed, but it does have to be paid.
• Applicant families are required to physically work at the property to help build (or renovate) it, and there are minimum numbers of hours they must contribute.  A portion of these hours must be worked by the applicant family themselves, but the hour requirement is high enough that it is designed for the applicant to tap into communities they are part of – like their church or place of employment – to get people to work on their behalf to fill the required hours.  Reasonable adjustments are also made if someone is physically unable (ie. they may be asked to stuff envelopes for a donation drive if they can’t go to the construction site and work).
• Applicant families are purchasing the home, it is not a gift, so they must work to secure financing.  Habitat for Humanity does have available to its applicants special loans which are not widely available to the public, and they do help applicants through this process.  Ultimately, if the applicant, despite their efforts, is unable to secure financing, Habitat for Humanity offers seller financing until such a time as the applicant does qualify for a loan program.
• The home is sold to the applicant family for 100% of the appraised value of the home.   Since the appraisal is done after the contract, it does require a leap of faith to enter into the contract.  However, the risk is lessened because the maximum payment is specified in the contract, so applicants know they can afford the house before they get too far in the process.

3.  The committee tells the applicant about the next available home, where it is and it’s size and basic features.  In our case, the home was being built, so there wasn’t much to see.  My clients did go look at the site and meet some of the neighbors, and they received a copy of the floorplans for the home.  If the applicant does not like the home or does not feel it will meet their needs, or if they feel that they can not fulfill the requirements or afford the home, they can withdraw their application.

4.  Based upon this information, the committee members meet and make recommendations on who should receive the next available homes, and there is a vote.

5.  If you’re selected, they contact you to congratulate you and set up a time for you to bring in your deposit, and sign the contract.  At that meeting, the details of your home are discussed and the process is explained, and the contract is signed.  You also begin your financing application process immediately.

6.  Then you begin fulfilling the work requirements, along with the assistance of your friends and support networks…. and eventually the home is complete.

7.  Once the home is complete, a home dedication ceremony is organized and held (you can check out all the photos from my client’s ceremony on “The Real Estate Whisperer” Facebook page HERE).

8.  Hopefully your financing is secured and around the same time as your Home Dedication ceremony you will have a typical “closing” like most retail buyers.  But like I said, Habitat will finance the house if they need to for the new owners, so sometimes things are done a little differently.  It varies depending on specifics.

My understanding is that once Habitat for Humanity is paid in full for the home the proceeds are funneled immediately back into the purchase or renovation of additional homes for their next applicant families.

Are you surprised at some of the requirements?  I was.  I did not know that the applicants purchased the home at 100% of Fair Market Value as determined by an appraiser, and that the applicants put in sweat equity that would not be required if they were buying a home under “retail” conditions.

Habitat does aim to build a quality affordable home… and they do.  As a REALTOR, price is usually key so it’s odd to me that a buyer promises to buy regardless of the price of the home.  But as I mentioned earlier, the reason this is possible is that the contract does specify the maximum payment of the loan is specified (which will be less than 1/3 of the family’s income) and Habitat guarantees that financing.  Plus, they have resources the rest of us do not, including government backed loans that can be amoritized over more than the “typical” 30 year loan period to make the payments more affordable.  They also sometimes add second and even third mortgages, which may be forgiven if the receiving family meets the required terms.

Some people have asked me “Did you get paid for this?”.  No.  Sisco is my client.  I sold the last home this family owned, and I did get paid for that.  But in my head “once a client, always a client”.  It’s not the receipt of a fee that ensures I am working to represent his family’s interests.  So yes, I helped… I was at the home visits, at the contract meetings, and served as a liason between Habitat for Humanity and my client, who is an immigrant, and was sometimes unsure of what they needed or how to do it.  I tried to help in anyway I could.  I believe my greatest value in the transaction was just facilitating and tracking the progress, and making sure he understood the terms of what was being offered and felt he could fulfill them.  The process is a little “different” even for a seasoned real estate professional, and I do suggest that applicant families have someone they trust – maybe a family member – help them through this unfamiliar process to make sure they fully understand the requirements.

Sisco and his family surely made me feel appreciated through the process, and I felt honored that they asked me to help them through it.   Sisco and his family go to my church, and before they moved, our girls went to school together.  I see them just about every Sunday, and sometimes even outside of church.  I love getting the updates and knowing that they love their new home, and it’s all working so well for them. This transaction has likely been the most rewarding home sale I have ever been involved in or ever will be involved in…. it’s so nice to see a family that truly deserves a hand up get exactly what they need.  Thank you Habitat for Humanity.

If you’d like to learn more about Habitat for Humanity, how you can help or how you can apply, just go to their web site: www.LoudounHabitat.com.

[Updated: July 2013 :  Habitat for Humanity is expecting to deliver about 7 homes in Loudoun in the next 12 months and are actively looking for applicant families.  Call them to see if you might qualify.]