Hey Arizona Home Sellers, Quit Picking on American Veterans!

There’s a travesty occurring in Arizona!  A travesty against our greatest National Treasure, U.S. Veterans!

soldier w kidVeterans deserve our utmost respect. You’ve received emails and seen posts on Facebook from friends and family that tug at your heart strings. Stories of soldiers back from a tour of duty overseas. Heartwarming welcomes and families reunited after being apart for months or even years at a time. The kindness shown by strangers to honor those in uniform. Strangers picking up dinner tabs anonymously. Flight crews inviting those in uniform to an empty first class seat.

It seems everybody wants to thank a vet for their service. Until, that is, one wants to buy their house. In a hot seller’s market, like that in Arizona of late (spring 2013), more often than not VA buyers get used.

In Arizona and especially in Maricopa County multiple offers on homes new to the market are commonplace.  Real estate agents often use VA offers to leverage higher offers from cash and conventional loan buyers. Then they kick the veteran to the curb! In a way it is is their job. The listing agent of a home for sale has a obligation to their client to net them the highest amount of money possible. The perfect storm to accomplish that is multiple offers, a bidding war. It’s not fair to VA buyers but that’s the way it is. It’s gut wrenching losing out on your dream home. It doesn’t seem right for people to go through it just because they want to use their VA benefit.

Reasons veterans are at a disadvantage and misconceptions:

  • VA won’t allow the veteran to pay many fees such as loan junk fees or escrow fees. Fees that can cost hundreds or even thousands of dollars. A common misconception is that sellers have to pay those fees. In reality the rule is the Vet can’t pay but what agents and sellers may not realize is that those fees can be paid by the lender. If the veteran is willing to take a slightly above market interest rate lenders are happy to pay some if not all of those fees.
  • VA appraisals have a stigma. And its an outdated stigma! In past times most appraisals were ordered by lenders. If an appraiser did a less than perfect job they may not have been hired again. But VA appraisers are assigned by VA from a rolling list. If A VA appraiser did a less than perfect job they still get the same amount of work. Most VA appraisers do an excellent job. With VA, real estate agents never knew which one they were going to get. Like most all walks of life a few bad experiences have tarnished VA for many. After the housing market collapse, new laws (Dodd-Frank) require that all appraisers be assigned. The misconception is these days VA is really not different from an appraisal standpoint. In fact, VA appraisals may be better! Why? Because when a VA appraiser is not finding comparable sales that support the selling price and thinks the value may be low the appraiser may issue what is called a Tidewater Initiative to the lender. The lender will then ask the listing real estate agent to provide comparable sales to support their price. The appraiser may then use the Realtor’s data in the appraisal report. This often means a higher value! The Dodd-Frank law made that  illegal for all other types of financing.  Many Realtors and the public at large don’t realize that fact.

There are many benefits of serving in the armed forces. If a person serves with honor they deserve to take advantage of every benefit. They have earned that right. Many times at a high price.
One of those benefits is the ability to obtain a VA Loan to buy a home to be used as a primary residence.
Some reasons VA loans are a great benefit are:

  • Zero down payment
  • VA loans don’t require mortgage insurance that is required for other types of high loan to value mortgages. Its a great deal for vets. They deserve it!

Some tips for Vets to win in a bidding war:

  • Ask your lender to pay loan fees. The VA rule says the vet can’t pay but it doesn’t have to be the seller that pays. If the vet is willing to accept a slightly higher interest rate the lender will pay some if not all of the costs and fees. They can even pay the escrow fee so the VA offer will be be more similar to other types of financed offers.
  • Tap a relative or investor to pay cash. If you can’t beat cash buyers join them. I recently represented a VA buyer who just couldn’t win against cash offers so I located an investor to buy their dream home, do some remodeling and sell it back to them. Since the investor was paying cash we were able to negotiate a better price, plus the buyer gets to update the house with the investors cash. That way the remodeling costs can be rolled into the Vet’s purchase Price and new loan so they won’t deplete their savings paying out for costly repairs. The investor will sell the house to the vet at a modest profit. But the vet gets the house he wants and wont have to deplete his savings to do it.
  • Don’t use your VA right now. Though the VA benefit is great many people want to use it when they don’t need it. Eric Wright at Amerifirst Financial offered this analogy, “Braces are great, but if you already have straight teeth, you wouldn’t want to pay for them!”  If you have the ability to use Conventional maybe you should save your VA for a different market.

If you are selling your home and get multiple offers realize that VA is not necessarily a bad thing. Consider what you need to put a VA offer on a level playing field and give the buyer a chance to do what’s needed to get you the required net and allow the vet to use the benefit they so deserve.

Want to thank a veteran for serving? Sell them your house!

For more information about how to use your VA loan benefit and still win complete this form and I’ll get right back to you!

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