Using Your VA Loan in a Competitive Market

In Solano county we have been experiencing situations where there are multiple offers on one piece of property. Our military service men and women are able to purchase homes without a down payment using their VA benefits, but typically a VA buyer is put at the bottom of the pile when there are multiple offers. 

So, how can a VA buyer compete with FHA, Conventional or cash offers? This post is a little lengthy so here is the bullet point version:

• Offer a reasonable price
• Pay your own closing costs
• Offer to pay for repairs
• Write a heartfelt letter
• Ask for a simple disclosure
• Have your agent present your offer in person

Obviously to be competitive you must offer a reasonable price. That means writing an offer that is not too low or too high for the area. Sometimes people fall in love with a home and are willing to offer well above market value. Most sellers have been informed that if the appraisal comes in lower than the price offered they will need to come to an alternative agreement, which typically results in a lower purchase price. Therefore, the seller will be more likely to accept an offer closer to market value that does not require them to pay closing costs, warranties, repairs, etc.

If you have some cash do not ask the seller to pay closing costs. Guidelines have recently changed allowing VA buyers to pay what are considered “VA mandatory” closing costs up to 1% of the purchase price if they are not paying an origination fee (which is usually sufficient for $200,000 purchase price). Make sure your real estate agent speaks to the seller agent about this. Some agents are unaware a VA buyer can pay these and will assume the seller needs to pay the VA mandatory closing costs.

State in your contract you will pay for repairs up to a specified dollar amount to satisfy VA requirements. Make sure you note all repairs must be approved by the buyer.

The less you ask the seller to pay for the better your chances!

Tug at some heart strings. Write a letter about wanting to raise your family in the home, how you grew up in the area, the kitchen reminds you of your grandma’s house, you have been moved all around the country and can finally settle down, pretty much whatever you can think of.  

You also have the choice to ask for one of two disclosures, the “Seller Property Questionnaire” or the “Supplemental Contractual and Statutory Disclosure.” The “Seller Property Questionnaire” is a four page disclosure the seller fills out covering in detail things such as neighborhood nuisances, water and mold issues, pets on property, repairs and alterations. The “Supplemental Contractual and Statutory Disclosure” is a more broad one page disclosure. I always recommend a buyer request the “Seller Property Questionnaire” so they can get as much information about the property as possible. If a buyer is desperate to obtain the property and feels it could increase their chances of getting their offer accepted if they request the shorter disclosure, it is an option.

The most effective way to get an offer accepted is to have your real estate agent personally present your offer to the seller. Your agent can clearly explain to the seller the advantages of choosing your offer and give them an idea of what the home would mean to you. This also shows the seller your agent is willing to put in the extra effort and will hopefully be easier to work with than other buyers’ agents.

Good Luck!