VA loan Offer

[Mike Romano]

Hello,

We've received an offer on our flip, and it's a VA loan offer, which is a bit new for us. The buyers seem really keen on the property, but the offer isn't as strong as we'd hoped. They're offering the full asking price with a $1k escrow deposit, and they're also requesting $10k for closing costs. I'm a bit concerned about the appraisal, given the full rehab we've done on the property. How do you suggest we counteroffer to ensure we're covered in case there are any appraisal issues or financing?

Grateful for any insights. Thank you!

[Joe Funari]

@mike @Mike Romano I wanted to clarify a few things as I am a realtor and a veteran too. I have personally helped a lot of veterans with VA loans. Long story short VA doesn't require us to make a down payment at closing. So very common to see a VA offer without a down payment. But you didn't disclose the current asking price. If you are being represented by a realtor consult with them what the typical earnest monies are for an offer. Here in the Dallas/Ft. Worth area it is typically 1% of purchase price. But again this is negotiable. Also, your realtor should have given you updated sold comps to give you a better idea about what to list your flip for after repairs were completed. So if you received a full asking offer and concerned about the appraisal then this will mitigate you concerns. Because you will have the same issue with any financed offer regardless of VA, FHA, or conventional financing. Regarding the VA inspections. If you did the rehab right you should be OK. My many years of experience dealing with VA inspections is that shrubs and trees are touching the house. This is conducive to "Wood Damaging Insects" to be able to get in the home. A lot of sellers overlook this simple step of trimming the shrubs and trees away from the home. Especially on flips it tends to get over looked. Also, if an older home make sure upgrade the electrical panel too. Gets a lot of novice investors too. @KC Pake had a great suggestion getting a checklist. But a good flip will cover the majority of such a list.

Also, if you didn't receive a pre-approval letter from a VA approved lender with the buyers offer ask for one. Then verify the lender the buyer has met all their conditions. A good VA lender will be able to close in 30 days too.

Also, research the VA Escape Clause too. This protects the veteran buyer's earnest monies if the appraisal comes in lower and the seller isn't willing to agree to the lower price.