For the most part, it is common knowledge these days that VA Home Loans are no more difficult to close than conventional loans. However, there are still those who continue with the notion that government-backed home loans suffer from the tangled red tape that makes them too complicated to deal with. Sure, some of that might have been true once, but those days are long gone. Today’s VA Home Loans benefit from the same streamlining and up-to-date technology as any other loan on the market. But the reality is that there are still sellers out there who are hesitant to accept VA offers, even though they can benefit both buyers and sellers. As a military buyer, you’ll have to present the strongest, most competitive offer to get it accepted by the wariest seller.
Why are some sellers hesitant to accept offers with VA financing? As a Veteran or Active-Duty Military member, you know that VA Home Loans offer excellent opportunities to purchase properties and begin building generational wealth. Eligible borrowers can avail themselves of home loans with zero down payments, no PMI, and no loan limits. Because the US Department of Veterans Affairs backs these loans, they must meet strict property requirements. So, if a VA-approved home appraiser finds that the property doesn’t meet the standards set by the government, the lender has to pause the loan until the seller addresses the issues. That can make some sellers apprehensive. Another possibility that scares off some sellers is if the appraiser values the home for less than the asking or offer price. The VA will lend only as much as the property is worth. In this instance, the seller will have to drop the price, or the borrower will have to make up the difference in cash.So, you can see how a strong offer can combat the fears plaguing some sellers – but first things first. Here are three strategies you’ll need to employ to get a seller to accept your offer:
- It’s crucial to do your due diligence before submitting an offer by selecting a property that meets the VA guidelines about condition and safety, ensuring a solid investment with no surprises.
- It’s vital to use a lender experienced in VA Loans. At Aligned Mortgage, we are a VA-approved lender with highly-trained loan officers, many of whom are Veterans specializing in the VA Home Loan process. We are always available to answer any questions regarding VA Home Loans.
- Use a real estate agent who is familiar with the specific needs of military buyers and who has extensive knowledge of VA Home Loans.
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- Submit a preapproval letter with your offer. We don’t mean a prequalifying letter. That’s not nearly as strong as the preapproval, which shows the seller that you’ve already been approved by the lender. A preapproval letter tells the seller and their agent that you’re a serious and qualified homebuyer.
- Offer more than the asking price, if possible. For many sellers, it’s all about the bottom line and how much money they can walk away with. To compete with cash buyers or those with conventional loans, consider going above asking as long as it’s within the appraisal.
- Consider additional earnest money. Another way of showing the seller that you’re a viable buyer is to put down more than the usual 1% security deposit or earnest money required from traditional borrowers, depending on the area. You want the seller to have confidence in your offer, and putting down additional non-refundable money furthers your cause. Note that at closing, your earnest money goes toward closing costs.
- Write a personalized letter to the seller. Words have power, and personal stories have swayed sellers, especially those who want to know that the home they’ve loved for years will continue to be cared for. You can include how you proudly served your country and how much the home would mean to you. But be cautious because you want to avoid introducing intentional or unintentional bias into the real estate transaction by having the seller select (or reject) your offer based on that information versus the merits of the offer. Although the idea is to entice the seller to choose your offer, do not include personal information such as your race, religion, familial status, or anything else that could cause the seller to violate fair housing laws.
- Get your lender to connect with the seller’s agent. Once your lender has preapproved you for a VA Home Loan and the underwriting department has cleared your finances, see if your loan officer will let the agent know you are qualified to purchase the home. This personal connection could offer the seller additional confidence in your offer.