If you are selling a home and don’t market it to veterans or accept bids from veterans with VA financing, you could be missing out a good sale. Veterans bring many benefits to the table, including the VA financing. While we know there are many myths surrounding this program that make it seem detrimental to sellers, it has many benefits.
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Selling to a veteran with VA financing isn’t as hard as it seems. Learn what the VA requires and then determine if it’s a good fit for you.
The Home Must Pass the Appraisal
Like any loan, your home must pass the VA appraisal. But, it’s a bit different than any other appraisal. Not only will the appraiser asses the fair market value of the home. He will also determine if the home meets the Minimum Property Requirements. In other words, is the home safe, sanitary, and livable?
The appraiser will go through the home with a bit of a tougher eye than he would for a traditional appraisal, but it’s nothing to fear. He basically wants to make sure that everything is in good working condition. He’s looking for things like mold, broken pipes, or appliances that aren’t working. That’s all. It’s not the full-blown inspection the borrower will probably pay for no matter the loan type, but it’s enough to make sure the home is a good investment.
The Closing Fees
This aspect of the VA loan is a tricky one. Technically, sellers are not obligated to pay the closing costs for the veteran. But, there are certain fees the veteran is not allowed to pay. If the lender still charges things like underwriting or processing, someone has to pay the fee. There are also third-party fees to consider, such as closing fees or attorney fees (except for title work). Veterans cannot pay these fees.
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This doesn’t mean you have to pay them, though. There are options:
- You can pay them if you want, giving the seller a credit at the closing. Sellers are allowed to give veterans up to a 4% seller’s concession at the closing. Again, it’s not an obligation to do so.
- The lender can offer a lender credit. If the lender helps the veteran pay the fees, they will likely jack the interest rate up a bit. It’s not usually a lot, maybe ¼ to ½ of a point. It’s obviously up to the borrower if he wants the higher rate, though.
- The real estate agent can also give a credit at the closing that comes right from his commission for selling the home. Some agents will do so to help the veteran get into a home.
That’s really all that the VA requires of sellers. It’s not a big deal and it’s not that much different from what they require for any other loan. Because the closing fees are not the obligation of the seller, the only difference is the way the appraisal is conducted. If the home is not in good condition, then chances are the buyer would back out of the transaction after the inspection report came back anyways.
Opening up your home to veterans is really a great way to sell your home faster. VA loans don’t take any longer than other loan types and borrowers get 100% financing, which can give them a chance to buy a home without any money down. It’s a great way to sell your home to someone that served our country.