by CYNTHIA ELIZONDO | Special Advertisement

Reevaluating the VA Loan

I recently had a seller ask me why we were listing his home as eligible for a Veterans Affairs (VA) Loan. “Isn’t it more expensive for the seller?” he asked. This is a common myth about this type of loan, even among Realtors. The reality is that it works like any other type of loan, if the home being sold is in good condition. The VA Loan is not meant to be used for major fixers with multiple defects; however, a home that is in good condition, but merely outdated cosmetically, will do just fine.

The factors a VA appraiser will consider when evaluating the home are: plumbing and electrical systems must be safe and in good condition; heating and roofing must be adequate; loose paint must be scraped and repainted; no leaks, excessive dampness, defective construction, or decay; and no termites, destructive insects, fungus growth, or dry rot. These are all items that a home inspector will look for, and most buyers – no matter what kind of loan they are getting – will probably want repaired. Just as with any buyer, the seller has the right to say “no,” cancel the contract, and move on to the next buyer. More often, however, sellers will usually agree that it is reasonable to request these repairs and will go ahead and fix them.

The other factor that sellers often misunderstand is the 100% financing option. Sellers often assume that just because a buyer is using 100% financing, they “have no money” and can’t afford the house. In reality, VA buyers frequently take advantage of this option to keep their cash in their pocket, to use for updating after sale, or just because it makes better financial sense to do so. Furthermore, the buyer would not be approved for the loan if they could not afford to make the payments, so if the lender says the buyer can afford the home, he probably can.

The VA Loan is a great benefit for our veterans, and we should not discount it and eliminate this group of potential buyers based on misconceptions and myths. Unless your home is a complete dump, keep our veterans on your list!


Cynthia Elizondo

CalBRE #: 01924853
Halcyon Real Estate Services