I am a veteran looking for a house. What are my chances of getting a short sale property with this type of financing?

Asked by Carlos, 92102 Mon Jan 16, 2012

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Julianne Pulido’s answer
Julianne Pul…, Agent, San Diego, CA
Wed Mar 27, 2013
Greetings Carlos,

My husband is also a veteran. Let me see if I can give you a complete answer. :)

For clarity's sake, however, the VA doesn't actually issue home loans, but it does provide guarantees that protect the lender should the borrower default, much like Federal Housing Administration lending program guarantees. These guarantees allow the lender to waive down payment requirements and offer more favorable interest rates and other terms to the buyer. Most veterans, as you may know, are eligible for a $36,000 basic entitlement plus a $68,250 bonus entitlement for a total of $104,250, though lenders will typically lend four times that amount with no down payment required -- even more in certain counties where the cost of living is higher.(500,000 in San DIego County)

You should know, however, that short sales can be exasperating because they frequently fall apart after months of work. Also, the VA has stricter appraisal requirements regarding a home's condition than conventional lending programs do, which is relevant because short-sale sellers are distressed and typically have no motivation or money to make repairs. Moreover, the VA more closely restricts what can and can't be paid for by the home purchaser.

That doesn't mean you shouldn't pursue a VA-backed short-sale property purchase, especially if you're getting a great deal on what you consider an ideal home. But be sure to seek out a broker experienced in both short sales and VA loans; there should be plenty out there given the market's recent history and the number of veterans seeking housing. Agent experience is significant because short sales typically require patience and constant communication with a variety of players such as other agents, loan officers, guarantors and escrow and title companies. Such an agent can help you structure an offer that's competitive with offers that don't require the sellers to incur a number of costs the way VA loans do. But be prepared to hang in there at least three months or perhaps longer.

If you don't have your heart set on one specific short-sale home, target several to broaden your possibilities and diminish your disappointment should a deal fall apart. Hint: Deals involving foreclosed homes already owned by banks are typically smoother and move along much faster.

Good luck in your homebuying. If you would like assistance, please just email or call! julianne @sd-realtor.com
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Robert Chome…, , San Diego, CA
Tue Jan 17, 2012
I don't think you should have a big issue if you have an agent that can explain to the seller that VA loans are not as bad as they are made out to be. There are a lot of misconceptions about VA loans out there among listing agents. The only difference between VA and any other loan is that VA requires a termite clearance. There is no difference on how tough the appraisal will be on a VA, FHA or conventional loan.

People are getting VA loans on short sales all the time.
Web Reference:  http://www.socalvaloans.com
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Cindy Caskey, Agent, Virginia Beach, VA
Tue Mar 12, 2013
The chances are in your favor..as long as the property is in good condition (VA appraisor approved) and as long as you are in a position to wait for the bank approval. Sometimes this can take 2-6 months. I sometimes find the perfect property for the veteran, perhaps a short sale, which needs work to pass the VA appraisal, required for lender. If it is a human being on the seller side (verses a bank) the seller can very often fix the repair. Sometimes a short sale seller does not have any cash to fix repairs, thus the hardship. It can happen, you just need to be aware and educated so you write on the right property!
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Kimberlee Fr…, Agent, Winter Springs, FL
Thu Jan 26, 2012
You can purchase short sales with all types of financing. However, if you are using an FHA loan then either the homeowner or you will be responsible to have the house in FHA condition in order to pass their inspection. You can also apply for a 203(K) FHA loan which would allow the cost of repairs included in the purchase price. If you are purchasing conventional, they really don't care what kind of condition the property is in because you put more down. If you are purchasing with a VA loan, then you are not allowed to pay for any repairs and your closing costs are supposed to be included in the loan.

So ... if you want to use an VA Loan you will need to make sure that the house would qualify for VA Financing and if not, is the Seller willing to pay for any repairs necessary to comply with VA Financing.

I would recommend looking at all your options for financing that you have available.

Hope this helps - Kimberlee Frank
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Nevin Willia…, Mortgage Broker Or Lender, Raleigh, NC
Thu Jan 19, 2012
Hi Carlos - I am also a Veteran and bought my first home in 1992 using my VA home loan benefit. VA requires the property meet minimum property requirements. In short sales if you make an offer on a home with issues and the seller is not in a position to fix the issues you will have a tough time getting VA to agree to guarantee the loan. If you find a short sale in good condition and if the lender approves your purchase request then you should be fine.
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Sinead McAll…, Agent, Oceanside, CA
Tue Jan 17, 2012
Hi Carlos,
FIrst of all Golden Hill/ South Park is such an awesome part of our county, there are some really great homes available there! To answer your question, your VA financing should not affect your ability to buy a short sale. Short sales are a rough sea to navigate, so please feel free to contact me directly to assist you, as I have a lot of useful experience. Looking forward to hearing from you,

Sinead McAllister
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Maureen Bye…, Agent, Oceanside, CA
Tue Jan 17, 2012
Hi Carlos; THANK U FOR YOUR SERVICE! YES! I represent VA buyers!! Also, I have listed, leased and sold shorts for decades! U have an excellent opportunity to purchase ANY home within your VA loan requiements!! I have a VA lender I work with that is a..mazing! We have one of my VA buyers in escrow on a beautiful home currently that is a short sale. Please contact maureen@bellrealtygroup.com or 760 622 6855.
Web Reference:  http://www.coastal.biz
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Cory La Scala, Agent, San Diego, CA
Tue Jan 17, 2012
Hi Carlos,

Having a VA loan doesn't pose a problem with short sales at all. Just so you know, the price you buy a short sale property for is determined by the bank that hold's the seller's loan, and they want what they want. You're not always going to get a good deal, and only two to three short sales even close. Keep REO's in mind too (bank owned homes). The price is already set, although some are listed low to generate offers (MANY short sales are), but if it's on the market and you have an offer that's accepted by the bank, you can close in 30 days usually.

Let me know if you need any further help.

Warm Regards,
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Jerry Heard, Agent, San Diego, CA
Tue Jan 17, 2012
Thanks for serving our country. You should not have a problem buying a short sale, foreclosure (REO) or regular purchase just because of the fact that you are using your VA eligibility. The offer just has to be structured properly so it is attractive to the seller or bank holding the loan on the short sale property.
However, if you are looking for a condo/townhome not all projects are VA approved so that will limit you. But don't let that worry you since there are many VA approved condo projects we would just have to find the right one.
I can set up a search for you that will keep you informed of homes that are on the market that are VA eligible.
I also recommend using a direct lender for VA since it will keep your closing costs lower. This is important if we decide to ask the seller to pay some or all of your closing costs.
I would like to help you find a home so please contact me at your convenience and we can start looking for a home for you.

I am never too busy for your referrals

Jerry Heard
Your Broker
The San Diego Property Shop
Direct 619-920-9796
Office 619-269-5545
Fax 619-269-9168
CA DRE # 00648687
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Bianca Romani, Agent, San Diego, CA
Tue Jan 17, 2012
Hi Carlos, why don't you call me and I will answer that for you? Bianca Romani. Accredited Buyer's Representative. 619-221-1696 office.
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Scott Godzyk, Agent, Manchester, NH
Tue Jan 17, 2012
The keys are you being prequailified and having your VA certificate. Then find a short sale that meets the standards as far as condition that VA calls for, make sure the sseller is approved to complete a short sale and that the price is at or near market value. A good buyer broker experienced in short sales can easily guide you through teh process.
Web Reference:  http://www.ScottSellsNH.com
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Paul Weiner, Agent, San Diego, CA
Tue Jan 17, 2012
Great question!
I can help you with this.
Just give me a call at 619-398-3885 to discuss your options.
We have an in-house lender that's very successful making loans and can save you a great deal of money.
Check our company out at http://www.argsd.com
Please let me know how I can help you get what you want!
Web Reference: http://www.argsd.com
Web Reference:  http://www.argsd.com
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Nancy Canfie…, , San Diego, CA
Tue Jan 17, 2012
I think your chances are good. But don't limit yourself to short sales. There are some great bank owned properties too - foreclosures, abandonded, etc. Also, there are some excellent buys on equity sales, because the other sales affect the comps, and pull thr prices down. A good agent will run comps in the area you are interested in, and give you a range at or under which is a good price. Best of luck to you.
Web Reference:  http://www.NancyCanfield.com
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Brooke Hengst, Agent, Centennial, CO
Tue Jan 17, 2012
Dear Carlos,

As long as you qualify for VA financing, you should have no problem at all finding a good short sale to submit an offer on!

If you need any help at all finding a good REALTOR or mortgage broker in your area, please let me know! I'd be happy to assist getting you into the right hands.

Brooke Hengst
Your Castle Real Estate
p: (720) 988-5952
Web Reference:  http://www.brookehengst.com
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Dana Rosas &…, Agent, Covina, CA
Tue Jan 17, 2012
Carols, Your chances are better than most buyers. The banks like a Veteran buyer. I get short sales through faster with a owner occupied buyer. So if you like I will help you. 619-631-0188. Thank you for asking, Dana & Eva
Web Reference:  http://www.danaleerosas.com
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Sasha Harvey, Agent, POWAY, CA
Mon Jan 16, 2012
Hi Carlos:

Short sales are tough with ANY kind of financing (unless it's an all-cash deal). But IF you have patience and time, you could have an opportunity to purchase a great home to live in!

Please don't be discouraged to try short sales just b/c you will be using a VA loan. I have helped many veterans in the past and can help you too...

Please call/email if you are interested in interviewing me or need more information...619.857.5044 or sandiegohouse@gmail.com.

Best of Luck!


Sasha Harvey----San Diego Castles Realty
Voted 1st runner-up in Union Tribune's "San Diego's BEST Real Estate Agent-2011" Readers Poll!
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Maureen McGr…, Agent, San Diego, CA
Mon Jan 16, 2012

I have had buyers that have been able to purchase a short sale using VA financing. If you are looking for a condo, you do need to make sure that the complex is VA approved. The other issue with VA financing is that the home needs to meet "health and safety" standards, meaning that there can be no peeling paint, cracked slabs, mold and all appliances need to be there. Finally, the VA requires a full termite clearance prior to the close of escrow. In a short sale, the bank that is short will not pay for that, so you would have to pay for it.

While that sounds like a lot of obstacles to purchasing a short sale using VA financing it really is not. If you are not represented by an agent and would like to discuss this further please feel free to contact me.

Maureen McGrath
Prudential California Realty
DRE #01714823
(619) 922-2441
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Dan Tabit, Agent, Issaquah, WA
Mon Jan 16, 2012
The biggest obstacle will be the home meeting VA qualifying conditions. Short sales are typically as is, as the owner is generally in financial distress and can't make repairs. If you are willing to pay for the repairs before it closes to meet any issues raised by the appraiser, your odds go up, but there is still risk that the deal won't close.
Short sales can take from 3-9 months to close and many may never close. This could happen, but it would be a series of medium to long shots all falling together in order to come out successful at the other end. I don't mean to discourage you, but the truth is the truth.
I wrote a blog post on the anatomy of a short sale. I think this may give you an idea of the potential complexity before adding in VA financing. I've attached a link below.
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David Dukes, Agent, Chula Vista, CA
Mon Jan 16, 2012
condos have limitations of approval staus with FHA and also VA loans. If your are going detached, the only problem is similar with FHA loans in that htey require that the property is deemed "habitable" (ie, working sinks/plumbing, no leaking roof, preferably no unpermitted improvements, stove and ... no cracked slabs, for example.
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