By Kay Wilson-Bolton
January 15, 2018
At the heart of every real estate transaction is a good appraisal no matter what type of financing is used to purchase the home.
In general, all homes must have Minimum Property Requirements which include a sound roof with generally five years of life left. The heating system has to be functioning without asbestos floating in the air. Plumbing and electrical system have to be in good working order, there has to be a kitchen and bathroom, reliable sewage system, hot water heater, safe and potable drinking water.
Homes on raised foundations have to have a stable foundation and adequate crawl space for ventilation. Homes have to have private driveways or permanent and reliable access to the property from the street. The property has to be free of any conditions which could negatively affect the health and safety of the occupants.
The home has to be free of poor or defective construction or degradation. For example, fireplaces should have dampers that work and spark arresters. House should be free of termite conditions, dryrot or fungus. Homes built before 1978 could have lead-based paint and no home can have peeling or deteriorating paint.
Sounds like normal and routine expectations, right?
Few people are willing to buy a home with these adverse conditions unless they are paying cash and receiving a price concession.
Appraisers are required to identify deficiencies and note them for the sake of the lender and the buyer who then has the right to ask the seller for corrections or walk away from the property. When termite corrective work is identified, buyers and sellers can sometimes agree on how to remedy the work by deleting it from the transaction or negotiating the cost of repairs prior to close of escrow.
With only one exception, VA loans are no different. The house has to be made free and clear of any termite infestation, dryrot or fungus.
The marketplace has the wrong idea about VA loans and as a result, the offers from many Veterans are excluded from consideration.
John and his wife just made their eighth offer since April of 2017. They have seen themselves living in eight different homes and have made offers on all of them. They are VA buyers with a significant down payment getting started in the home buying process after the kids have left home. They have excellent credit and want to be homeowners while they are still working.
While VA will not let the VA buyer pay for a termite report, the buyer can pay for work to be done prior to close of escrow. A free and clear report is required in all VA transactions prior to closing. Thanks to wise homeowners who obtain termite reports before the home goes on the market, all buyers can know what they are facing early in the process.
VA loans were designed to help Veterans buy homes. They can purchase a home with nothing down in a loan amount up to $672,750 in Ventura County. Sadly, when the market heats up, the age-old fears and impressions about VA loans squeeze VA buyers out of the market as sellers opt for buyers using “conventional financing.”
Some of those fears are lengthy escrows, intense government restrictions and influences. In my recent experiences, appraisals are completed in 10 days; and smart loan officers can get a VA loan through in 35 to 45 days.
Sellers will often exclude FHA loans from consideration for fear of the need to make unplanned repairs to the home. If a home is substandard in any way, the items will be identified as negative issues and repairs will be required prior to close of escrow no matter what time of loan is utilized.
Sadly, loans which are not VA and FHA are called “conventional” and any loan that is not “conventional” is considered “unconventional”. It, therefore, sets up a seller to wrong thinking.
I encourage sellers to research the VA loan of today and give thought to considering an offer from a buyer who has served this Country in the military. It’s good for nation and it’s the right thing to do for Veterans.
Kay Wilson-Bolton is a Certified Military Relocation Professional and has been serving Ventura county homeowners since 1976. She is a broker associate with Century 21 Troop Real Estate and can be reached at 805.340.5025 or firstname.lastname@example.org