Any drawbacks to sellers working with VA buyers?

Question

Hi there, I am a newer agent and haven't had the opportunity to work with Veterans yet. I wanted to know if there are any drawbacks to working with Veteran buyers? I am told that it is more expensive for sellers to accept VA offers because of Termite inspections and repairs and many other costs. Is that true? I am aware of the Termite inspections, but what other costs will seller have to incur?

Thanks

Matt M. · Answer

@Esmeralda Yniguez

I sold my last house to a buyer with a VA loan. The $150 termite inspection and $160 to treat for powder post beetles (the damage was probably 60 years old) didn’t turn me off a bit, nor did splitting a $1500 parking pad issue that was called out by the appraiser. It did take about 60 days to close, but whatever, they were a nice couple that loved the house and he served our country. Good enough for me.

Shaun Weekes · Answer

I would recommend to let your sellers see the bigger picture.  Accepting a VA offer helps get vets into homes!

Brian Haskell · Answer

There are sometimes longer escrows, around 30-45 days, the pest inspection which you mentioned, and sometimes certain safety issues that need to be repaired. It is a minor inconvenience in my opinion. I am a Veteran and have used the VA loan product myself with no issues personally.

Matt Aldrich · Answer

I'm selling with VA loan now. Did you have to get the powder post beetles treated before you closed or is that something that can be done after?

Lynn McGeein · Answer

Our area sees a lot of VA home loans, so we're used to them.  It used to be that VA appraisals were always tougher, requiring stupid repairs, low appraised value, took weeks, etc., but that has not been the case recently.  I think a VA buyer can now pay for termite inspection and even some repair if needed if the termite inspection is required. I believe they also just came out recently with a statement that VA buyers are allowed to pay their own reasonable buyer's agent fees, although seller can still pay them if negotiated.  So the costs to sellers is similar to other loan products.

Carlos Scarpero · Answer

I'm a loan officer and the majority of my business is VA. The main drawback of the VA home loan is all perception. Sadly many sellers and agent think the inspections are way harder than they are.The termite report is cheap, less than $100 and anyone can pay it.Please give these vets a chance for home ownership.

Brian Garlington · Answer

Not being a jerk, but couldn't your broker answer these questions?  In any case, I second what Shaun Weeks said....let the sellers see the bigger picture here. If you come across someone that doesn't want to work with veterans and servicemembers trying to use their VA loan then shame all around.

Russell Brazil · Answer

Negatives to VA Loans

- Seller pays for termite Inspection

-Termite damage needs to be repaired

- VA property condition requirements

- Longer close times

- VA borrowers are typically, but not always, First Time Home Buyers, so all the perils that go along with that.

- VA Borrowers very often tends toward very subpar lenders like USAA for instance.

-Appraisals seem to come in low a higher percentage of time than with conventional loans

As a listing agent, this is the order of preference for how the loan on an offer looks

1) All Cash No Contingencies

2) All Cash Some Contingencies

3) Hard Money Local Hard Money Lender

4) High Down Payment Conventional Loan

5) Low Down Payment Conventional Loan

5) FHA/VA Loan

6) FHA/VA Rehab Loan

7) Hard Money National Lender

Irene Nash · Answer

My understanding is that when it's a VA loan the seller has to pay the entire escrow fee rather than splitting it with the buyer, so it's a bit more expensive for the seller. Many sellers will be fine with that (depending on the price they're getting of course), it's just important for them to know about it up front. Google 'non allowable VA loan costs' and you'll find plenty of info, in most cases the escrow fee is likely to be the main thing that will apply.

Any drawbacks to sellers working with VA buyers?

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