Home Buying in Oakland>Question Details

meier8237, Renter in San Francisco, CA

Why is it so difficult to buy a home in Oakland with a VA loan? We are really frustrated with the lack of understanding.

Asked by meier8237, San Francisco, CA Fri Sep 14, 2012

Help the community by answering this question:


It’s not a lack of understanding at all … in fact, it’s because VA loans are VERY well understood that sellers are opting to go with other offers that have different types of loans or cash.

In the current market with escalating prices, sellers can choose whom they sell to, and they are, en-masse, choosing either cash or conventional financing with a high percentage of money down. They are also asking that the sale be “AS-IS” and in many cases, that the appraisal contingency be removed. They want a full 3% down as the good faith deposit.

VA mandates:

1. That the buyer need only put down a very minimal amount, which is then refunded at the close of escrow for an effective 100% financed loan.
2. That the seller provide a Section 1 and, in many cases, a Section 2 clearance.
3. That the home be in move-in condition.
4. That the home appraise for the offered price.
5. That the seller contribute to closing costs.

While the VA program is a great idea for our Vets (one of my daughters is currently in the armed forces, so I appreciate the sentiment), it only works in certain markets … and this is not one of them. And it’s not just VA loans getting blown out of the water … offers with FHA loans are more often than not DOA as well.

Here is a post that may clarify for you:

Veterans and VA Loans: Losing The War … At Home
0 votes Thank Flag Link Sat Sep 15, 2012
There isn't much I can add to the excellent responses already given. but that being said, I am representing the seller for an extensively remodeled home in Oakland. VA loans will not be disqualified. neither will FHA. We're confident that this house will pass the stricter guidelines. Go to http://www.2894delaware.com and see if this fits your needs and meets your budget. We'll be open Sunday and reviewing offers monday.
Web Reference: http://www.2894delaware.com
0 votes Thank Flag Link Fri Sep 14, 2012
It is not just in Oakland that VA borrowers are having difficulty in getting their offers accepted. In the current market, VA borrowers are at a disadvantage. It is not a lack of understanding. It is a matter of the sellers opting for offers that have a higher likelihood of closing at the contract price with the least hassle and cost for the seller.
0 votes Thank Flag Link Fri Sep 14, 2012
You may want to speak to your lender and see if you also qualify for other types of loans so that you are prepared next time you find another property you'd like to compete for.

And as you now know, the market is very competitive, and it's not unusual for listings to received multiple offers within days after the listings are activated on the Mls.

Good luck to you.
0 votes Thank Flag Link Fri Sep 14, 2012
With most of the issues already mentioned, the biggest one is appraisal. In order to get the house, you need to offer over asking price, and 99% of the time it does not appraise for purchase price. Appraiser right now are not up to par on market trends. Which means you would have to come up with Cash to make up for the difference.
Good luck.
0 votes Thank Flag Link Fri Sep 14, 2012
Hi Meier:

I can't contribute on this answer but would like to interject to comment Taylor for the information I learned today.

Thanks Taylor.

Best to both of you
0 votes Thank Flag Link Fri Sep 14, 2012
It is a very competitive market right now and Seller's pretty much can pick the Buyer. Sellers lean towards the contract they feel is going to close, with the fewer amount of contingencies and problems.

VA requires an inspection and certain items need to be repaired. The property also has to appraise. With the amount of investors in the market, VA, FHA and LOW down Buyers are missing out because all cash with few to no contingencies is very pleasing to a seller.

It is unfortunate. I don't believe that it is all a lack of understanding, but who has the best over all offer.

Hang in there.
Web Reference: http://www.terrivellios.com
0 votes Thank Flag Link Fri Sep 14, 2012
Most of the single-family homes in Oakland tend to be older, and even ones that have been remodeled, have a hard time passing VA's stricter guidelines. In order to use a VA loan, you need to pretty much only be looking at new construction or homes that have been extensively and completely remodeled. You may also need to expect to beat the next highest offer considerably to overcome the stigma attached to a VA loan.

The best place to use VA loan right now are some of the new construction condominiums and townhouses. New construction is generally happy to sell to all-comers and do not have the same bias to VA loans as many individual Sellers do.
0 votes Thank Flag Link Fri Sep 14, 2012
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