What Sellers Should Consider When Receiving a VA Loan Offer
There are advantages to being a VA buyer in a Low Inventory Market…
You have probably heard we are in a sellers’ market. The type of market is dictated by housing supply numbers. In Spokane, Washington there is less than one month’s supply of homes for sale. This means as a buyer you are probably going to be in a bidding war for the home you are trying to purchase. This means you are probably going to have to bid a little over asking.
As a VA buyer, unfortunately this probably means you will have challenges in getting your offer accepted. Below are some reasons sellers should consider a VA loan offer as prices go above asking price.
Zero Down Advantage
Down payment requirements are based on the appraised value of the property. If an appraisal were to come in a bit low all buyers will have to add the difference to their down payment amount. Many VA Borrowers have the funds for a down payment but because of the advantages the VA loan offers choose to go with no down payment. It will be easier for the VA buyer to make up the down payment than it would be for the conventional or FHA Buyer.
VA Appraisal Options Advantage
VA loans have two options to adjust the value as the appraisal is completed and comes back with a low value. Tidewater and Reconsideration of value both offer a chance to use comparable properties and other data to make your case to an appraiser and the VA about the homes value. This isn’t the case with other loan programs. As a seller and buyer if you complete the entire low appraisal process you will know you are getting maximum value for the home.
Closing Timeline Advantage
In a hot market, appraisers get flooded with appraisals, their turn times and costs increase when this happens. VA Loans in Spokane County are required to be turned into the lender within 10 business days. This can speed up the transaction. This is especially true if you have a unique property or are selling in a rural area.
As home prices increase many borrowers are reaching their maximum debt-to-income ratio and having trouble qualifying. This could even be more challenging if rates were to increase. VA loans can be more lenient in terms of qualifying requirements. Accepting a VA offer could limit the amount of challenges a lender has in approving the loan.
While most lenders offer the VA loan product as a financing option, not all of them are good at them. This has created a bad reputation for the loan. As a seller and listing agent it will be important to make sure the lender doing the financing is well versed in VA financing.
Here are some questions you can ask…
- Have you obtained a certificate of eligibility? If they haven’t the lender isn’t sure if the buyer will qualify for the VA Loan. This should be the first step in getting a VA Loan.
- Has the loan received AUS (Automated Underwriting System) or Underwriter approval? AUS is the system all lenders and their underwriters use to ensure guidelines are being followed and the loan can close.
- Have you been through the Tidewater and Reconsideration of Value process? Some lenders don’t understand this process which could cost the seller money if the appraisal were to come in under list price?
The biggest problem Military Home Buyers face is the misconceptions in the real estate community about VA Loans. If you have questions regarding the VA Loan as a buyer, seller or real estate agent please reach out.