In many areas of the country, real estate markets have experienced inventory shortages, especially in major metropolitan areas. The seller, in many cases, will have several competitive offers to choose from, and it can be difficult for the veteran buyer to find a homeowner who will accept an offer through VA financing. Based on past veteran buyer issues, several strategies will be illustrated on how to make your VA offering as competitive as other types of financing, such as a conventional or FHA offering. You may want to discuss your options with your loan officer to increase your chances of having your offer accepted.

Generally, there are 5 main areas of concern:
1) Closing costs
2) Misunderstanding of mandatory fees
3) Assessment of VA vs. Conventional appraisal or FHA appraisal
4) An offer with more money seems more attractive to a seller
5) VA offer requires a termite clearance

These 5 topics will be developed in more detail in this article. Understanding these 5 common areas of misconceptions will likely increase your chances of landing an accepted offer.

Many veterans need help with closing costs. In a seller’s market, instead of asking a seller to help pay your closing costs, you may want your lender to raise your interest rate and apply for a lender’s loan to cover your closing costs. Regarding additional fees, many agents have the misunderstanding that a seller would be responsible for the mandatory fees.

This group of fees includes: escrow, processing, and underwriting. VA guidelines state that these fees are the responsibility of the seller when the lender is charging a 1 point loan origination (which is rare in today’s credit environment).

This concern must be addressed so that all parties accurately understand the VA guidelines. The most important misinterpretation is that a VA appraiser may request further repairs on the property in question. In today’s lending world, due to strict federal guidelines, conventional, FHA, or VA loan appraisals use similar standards.

Many sellers believe that a conventional offer with a 20% down payment appears to be a stronger offer than a VA loan with no down payment. The offer with the highest down payment is believed to have a higher probability of closing. If both buyers have been pre-approved by an experienced loan officer, and the borrower information has been pre-approved by Fannie Mae’s underwriting software, called Desktop Underwriting, then they are both equally likely to close.

The only area where the VA loan may have a slight disadvantage is that the VA requires a termite report and authorization, but conventional and FHA loans do not. VA guidelines allow you to pay for repairs, but not for the report itself. You can offer to pay for the repairs if the report is available and you know the costs. If the repairs are expensive and the seller chooses to reject them, you may have to deliver a home.