Posted on May 22nd, 2013 No comments
I’ll be honest, it’s challenging in this market to compete with other buyers when you have VA or FHA financing. The reason being is there are so many buyers making offers on properties that sellers naturally gravitate to offers that are all cash or have heavy down payments, and those offers that remove certain contingencies such as appraisal or loan up front. There are two major issues that you are up against with a VA loan.First, the appraisal process can be sticky. If there are issues with the property, the appraiser will red flag these items which will need to be addressed prior to the close of escrow. In most cases, the seller knows that this responsibility will fall on them because someone who isn’t making a down payment, won’t be able to afford the cost of repairs either. Second, sellers equate (whether accurate or not) the size of the down payment to the strength of the buyer.It’s going to be crucial for you to work with an agent who can effectively educate the listing agent to why your offer is a strong offer. And there are things you can consider to make your offer stronger. For instance, you might not be making a down payment, but you can pay your own closing costs. Or if there are problems with the property, you may want to put in the offer that you will take care of these costs for repairs. You also may want to refrain from asking for a home warranty paid for by the seller. Doing things like this will help you structure a stronger offer.You may also want to make sure that you pick a lender with the shortest turnaround times. The time it takes to process a VA loan can be longer than conventional financing which is definitely a down side. With my VA clients, I also like to emphasize the patriotic angle of a VA offer. Veterans are being rewarded for their dedication to this country. They shouldn’t be penalized for not making a down payment. As long as the lender is giving the preapproval, there is no reason why the loan should not come through. I always want to encourage positive feelings with the seller if they decide to accept a VA offer.. it’s like they’re saying thank you for your service.It’s going to be challenging, but it’ s not impossible. You just have to be patient and keep trying.