Should I Sell My Home To A Buyer Getting A VA Loan?

Real Estate Broker/Owner with Warm Weather Real Estate AZ BR558423000



Should I Sell My Home To A Buyer Getting A VA Loan?

The GI Bill of June 22, 1944, created home loan guarantees for all United States Veterans of the armed services.  With this came distinct benefits for the veteran, a way of saying THANK YOU to the veteran for his/her service.

Your home has been on the market for a few days and your Realtor brings you a contract for purchase asking you to sell to a buyer who is pre-qualified for a Veterans Administration (VA) Loan.  What should you do?

Here are some key points of which to be aware:

  1. The primary benefit for the veteran obtaining a VA loan is reduced cost to the veteran.  The veteran is not to be charged any form of private mortgage insurance.  Due to fewer charges allowed to be paid by the veteran, your selling costs may be somewhat higher.  In 1982, Congress levied a 1.25 - 3% funding fee, depending on the veteran's history. Be sure to get an itemized list of what you are expected to pay.
  2. The veteran may obtain a 100% loan, no down payment required.  Usually with the no down payment requirement, the veteran buyer will offer a minimal amount of earnest money in the purchase contract.
  3. A VA loan has somewhat strict appraisal requirements so far as the actual condition of the home being financed.  Although the trend has been to relax the requirement somewhat, the VA buyer contract or addendum will include the following "Option Clause": "It is expressly agreed that, notwithstanding any other provisions of this contract, the purchaser shall not incur any penalty by forfeiture of earnest money or otherwise be obligated to complete the purchase of the property described herein, if the contract purchase price or cost exceeds the reasonable value of the property established by the Department of Veterans Affairs. The purchaser shall, however, have the privilege and option of proceeding with the consummation of this contract without regard to the amount of the reasonable value established by the Department of Veterans Affairs."

The above points should by no means discourage you from selling to a VA borrower.  These are only points to be aware of when considering the bottom line of the offer.  In today's market, VA loan home purchases are fairly common and progress to closing fairly smoothly.

Although the veteran buyer can borrow 100%, only 91% of VA buyers skip the down payment.

The average age of a VA borrower is 39 years.  9% of VA loans are to female veterans.

The maximum loan limit is determined by the location of the property. In Maricopa County, Arizona, the maximum loan insured by the VA is $417,000.

If you have other quesitons or concerns regarding selling your home, please feel free to contact me.