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Daphne Byw, Other/Just Looking in

why is it so hard to get offers accepted with a VA loan??

Asked by Daphne Byw, Sat Aug 31, 2013

why is it so hard to get offers accepted with a VA loan?? I feel so frustrated and we have been looking for months. I am grateful to have this option but now i feel like its hopeless especially in orange county

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8
Daphne,

Keep the faith. Yes, there are reasons why a VA loan can be harder to approve and fund than other types of financing, but the real answer to your question is "timing." Right now, many markets are competitive and sellers will not take any chances. But markets do not move in a straight line and today's scarlet letter offer may well be tomorrow's godsend. In 2008 and 2009, sellers were clamoring for ANY offer, and somewhere between the dynamics of now and then there will be a balance that will make your VA offer more viable. Stay at it, stay approved and ready to go and you will win in the end.

Do not take Satar's advice below and write the offer as conventional and then change it to VA. That could cause a lot of issues down the road and put your deposit at risk. Some of those issues will not be perceptible at the outset and some may not even be related to your creditworthiness. Always take the high road.

Rob Spinosa
rspinosa@rpm-mtg.com
2 votes Thank Flag Link Mon Sep 2, 2013
Home buying can be really stressful, and I'm so sorry you are having a hard time finding something. The market, this year really hasn't helped you much since buyers are looking first for cash buyers, then those with heavy down payments and sometimes folks with VA loans are taking advantage (rightfully) of the no or low down payment option. Buyers want to be sure someone has the means to close, so they sometimes looks for people with more cash to overcome obstacles.

Along with that, though...you have two other challenges. You need to buy a VA approved home, which if it is a condo, can limit you. Make sure your agent and lender are checking that before you even bother to see the place. Two, there are health and safety things that need to be met before it can close. This means that either you or the seller will have to fix certain things in order to close and many sellers are nervous those fixes may eat into their profit.

As we head into fall, things will likely get a little easier for buyers, so try to hang in there. You'll find it...just work with your agent and lender to make sure you have your best foot forward each and every time.

Best of luck to you.
-Meredith
1 vote Thank Flag Link Sun Sep 1, 2013
Hi Daphne, I can appreciate your frustration. It HAS been a difficult market for ANY buyers trying to buy a house with less than 20% down financing. The operative word there, is HAS.

The market is now shifting - away from a strong seller's market, and toward a more normal, or balanced market, where buyers will have more success trying to do a little negotiating.

One of your problems MAY be the lender you've been pre-approved by. If they aren't absorbing some of the costs VA buyers usually try to foist off on a seller, then your offers may have involved too many costs, over and above other offers.

In a VA offer, either the seller, or the buyer's lender, has to pay some of the Veteran buyer's closing costs. In VA sales I've done - over the past few years - my recommended lenders have "absorbed" those costs, which makes my buyer's offer more competitive with other offers, involving financing.

So, that is one avenue to pursue, if you haven't already. I do have lenders to highly recommend, if you're frustrated with the one you've been attempting - unsuccessfully - to use.

Also, with respect to today's local market, over the past month the housing inventory has grown substantially - almost double that of 3 or 4 months ago, which is in your favor.

One last factor is that cash buyer investors have practically left the Orange County market, due to prices having gone up around 20+% over the past year. The majority of the GOOD deals - like short sales, and bank owned houses have all been snapped up.

So, for the next 3 to 5 months, you SHOULD have a much better environment for finding a house to buy with your VA eligibility. To reiterate: Twice as many houses now on the market, coupled with half as many buyers. But beware, this condition will probably only last until next year's Spring market comes to life, around February 1st, 2014.

After that, the market will shift back toward sellers - in MY humble opinion. Good luck in your quest.
1 vote Thank Flag Link Sat Aug 31, 2013
And the answer to your question is that VA loans have stricter guidelines when it comes to appraisals. Also, VA buyers usually do not have the funds/monetary resources to pay for any appraisal differences and/or repairs they come across. So usually the transaction falls apart.
0 votes Thank Flag Link Sun Sep 1, 2013
Sad to say, in this year's market where multiple offers are the norm, VA and FHA offers have been treated like dirt. The perception (although sometimes erroneous) is thgat your offer is 'less strong' than that of a conventional loan.

All I can tell you is that you are not alone and thousands of people have experienced this. The market has begun to soften with the change of season and rise in interest rates. Don't give up.

I recently employe a change of staregy to find one FHA buyer a home...check out my blog about it - in case it offers any ideas for you:

http://1sandiegohomesales.com/first-time-buyer

Good Luck.
0 votes Thank Flag Link Sun Sep 1, 2013
The fact of the matter is that most people are stuck in the past and have no idea about the VA newer standards that now closely rival the standard loan practice. Time have changed and so has the VA process.......


Bill
0 votes Thank Flag Link Sun Sep 1, 2013
Find a great VA loan person who can close in 30 days or less and then write up the purchase offer as conventional and then flip it to a VA when in escrow.
0 votes Thank Flag Link Sun Sep 1, 2013
Because the seller is not informed about how great the VA loan really is!
0 votes Thank Flag Link Sat Aug 31, 2013
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