Getting Your VA Offer Accepted
There have been a few industry articles written recently which purport that VA buyer offers are a challenge to get accepted by Sellers in this market. Some of the challenges reported by agents across the country are:
“She (the buyer) may have to change from VA to conventional to be more attuned to the current market.”
“When people (sellers) are deciding which offer to accept, the pecking order is cash, conventional, FHA and then VA.”
Although those are just 2 examples of a multitude of responses sellers and/or their agents have with VA buyers, they stem from the same common source when it comes to the VA mortgage: a widely misunderstood and under-utilized loan program. In this article we are going to debunk the top 3 objections we hear when VA buyers make offers on listings, and we will also share the top 3 advantages your VA buyers may have with sellers these days.
These are the 3 most common objections to VA offers and why how we debunk them to get our client’s offer accepted:
1. Sellers have to pay all the closing costs to the Veteran. False. Sellers do not have to pay all the closing costs. This is often misinterpreted for the “VA non-allowables” which are costs the veteran is not permitted to pay for as part of their acquisition of a property; however, it by no means comes close to being the bulk of what we traditionally refer to as “closing costs.” VA buyers may write a contract which asks the sellers to contribute to the closing costs, but in the end the sellers can counteroffer that measure all together or come to some sort of middle ground with the buyers.
2. VA loans take too long to close. False. The fastest type of escrow closing is a cash buyer. Apart from that, Conventional, FHA, and VA all have an escrow period that possess aspects of mortgage financing that are within the lenders control, and some which are not. Specifically, the appraisal process is blamed for loans taking too long to close; however, this does not mean that it’s only VA loans which have this requirement. Any loan that has financing will have a period of underwriting, submitting conditions, clearing conditions, funding, recording just to name a few. Each step has its own position in the timeline of closing successfully.
3. VA buyers don’t have money down if they need 100% financing. False. Just because the buyer chooses to use the 100% financing option offered with the VA home loan does not mean the buyer also has Zero assets. Commonly, users of the VA loan have plenty of assets to sweeten the deal if they have to. Since the VA home loan does not have mortgage insurance, financing up to 100% of the purchase value typically works in the buyers favor so they can keep their cash in hand rather than use it for down payment. Afterall, a primary part or the mortgage qualification is income and assets – Whereby the more you have of both helps the borrower in the eyes of underwriting guidelines. Additionally, outside of meeting the banks underwriting requirement for assets on hand, what difference does it make to a seller how much the buyer has? If the answer is connected to a bidding war between multiple offers, then there is space for that argument; however, most often sellers misinterpret 100% VA financing for the buyers squeezing themselves into the sale. This could not be further from the truth.
As we mentioned there are also some specific reasons sellers may accept a VA offer over all other offer financing types. Here are the most common ways local VA clients win offers in a Military town: (Connect with the best Chula Vista VA loan expert)
1. Camaraderie. Yes, one word. Before thinking it’s an oversimplification of the situation, remember there tends to be a strong camaraderie among active-duty service members and veterans alike. Even if they served in different branches at different times, the fact that they too offered themselves to service in the military is more often than not, a top reason why sellers who are veterans will accept an offer from a buyer using their VA home loan.
2. Legacy. Over the course of our 16 years in business we have had our fair share of active-duty VA buyers get their offer accepted because the seller wants to leave their beloved home to a family who will treat it with honor and respect for years to come. Particularly in military towns you will see VA offers get accepted by sellers who understand the importance of having a family home while arriving at your new duty station.
3. Ability to close. The VA home loan does have it’s fair share of parameters and guidelines which set it apart from conventional and FHA loans; however, that does not mean it invites or approves “weaker” buyers who lack strong financial qualifications. Listing agents and sellers alike who understand that a VA buyer must still qualify under the lending institution’s scrutiny are less likely to put that VA offer at the bottom of the stack of offers.
We hope that in reading this article we addressed some of the misconceptions sellers have had about VA offers. We know realtors and sellers alike have had a myriad of experiences with buyers and hope this sheds some light on the gap between what the industry at large may be encountering vs. what we see on a regular basis with our VA buyers and VA realtors successfully getting them into the home of their dreams!
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Rates & Fees Disclosure:
‡ The payment on a $300,000 30-year fixed-rate VA loan at 3.000% with a 80% loan-to-value ratio is $1,292.01 with 0 (zero) origination points due at closing. The annual percentage rate (APR) is 3.235%. Payment does not include tax and insurance premium impounds. The actual payment amount will be greater. By refinancing your existing loan, the total finance charges may be higher over the life of the loan. Some state and county maximum loan amount restrictions may apply. Appraisal fee of $600, Processing Fee of $895, Underwriting Fee of $795 included in APR calculations with borrower paying 0 (zero) loan origination points.
‡ Based on Mortgage Heroes internal data.
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Mortgage Heroes has been helping Active Military and Veterans for more than 15+ years. This page is made to help all military families get the answers they are looking for when it comes to housing. Whether its questions about using your VA or new listings in SD, Mortgage Heroes are here to support just as each military member has supported this country!
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