What to know about using your VA benefits.

Thank you for your service to our country. You have earned your benefits. Buying a home with your VA loan is one of them. It seems straight forward. You get a better interest rate and you don’t have to use your own money towards a home purchase, right? I wish it was that simple. There are things that you need to know about using VA loans in our local market.

I have worked with quite a few clients military clients who have used their VA benefits. I have encountered the same issue with getting them into a home and these issues rarely show up when selling a buyer a home with a FHA or Conventional loan. Their VA appraisal values comes in lower than the offer price. Now, this can be an opportunity for a seasoned agent to negotiate the price down and get you a better deal, but if the appraisal is absurdly low or you are in a competitive market with multiple offers on each house, then it doesn’t work in your favor. Listing agents shy away from accepting an offer with a VA loan because they are protecting their sellers and have more choices available to them.

Why is this happening? Well, in areas of the country where military bases are, VA loans are more frequently used. Because the VA evaluates and establishes value in more of that market, they hire more VA appraisers and those appraisers are out every day evaluating property values. In our area, we have Hill Air Force Base in Davis County. The cities that mostly service this base are Layton, Clearfield, Riverdale, Roy and Sunset. Pricing in those areas as compared to Salt Lake County are significantly lower.

VA requires that their own appraisers evaluate a subject properties value and they don’t use the full pool of certified appraisers to draw upon. There are fewer VA appraisers in our area. We also have fewer buyers using their VA benefits so the VA appraisers are not always actively involved in evaluating pricing in the market. Even over a couple of months prices can change. In this type of rapidly changing market, if a person isn’t actively involved in it on a daily basis, then determining the actual market value can be difficult.

Another thing to understand is that VA appraisers are held to a much different standard on the condition of a property than a conventional appraiser is. There is a higher chance that there will be repairs required by the loan. Sometimes those repairs are easy, like providing window screens or a handrail to the basement, but other times it is repainting any chipping and pealing paint on the exterior of a home or a shed. That isn’t so difficult to do in the summer, but in the winter it can become a big issue. Also, if a seller has multiple offers and their agent knows that your offer might result in these repairs down the road, they will probably opt to accept another offer over yours.

Now, is all lost? No absolutely not! I love helping our service men and women get into homes of their own. As a buyer you just need to higher the right Realtor who will fight for you. You and your agent will need to go into the negotiations the fully aware of the possible issues and have a plan as to how you are going to attack those issues together. I want you to be able to use your benefits. You ave earned them. If you are thinking about buying a home and want to use your VA benefits let’s talk about how we can maneuver around these pitfalls and get you into the home you want.