VA loans can close more smoothly and rapidly than conventional loans

My two sons are both active members of the U.S. Navy. In 2013, one of them placed offers on 23 homes with his wife before getting a home in Fremont. He’s a UC Berkeley grad who saved a lot of money working for Tesla before his first U.S. Navy deployment to the Middle East. But the market was so competitive that agents and sellers shied away from the offers when they saw he was approved for a U.S. Department of Veteran Affairs loan. VA loans are one of the few benefits people like my son receive. They get the lowest cost-of-credit and lowest interest rates possible, often with no money down. And their loans are backed by the VA, which approves borrowers before they even make an offer.

My son is now serving his second tour in the Middle East. Thankfully, his wife and two children are comfortable in the Fremont house they bought. But it took a great deal of effort to educate the sellers about VA loans. Unfortunately, I see this all too often. Some of the most experienced agents advise sellers to avoid VA offers. As a result, financially stable veterans get squeezed out of home purchases in spite of the fact that their offers are as strong as any conventional offer. Sometimes they’re even stronger.

Bill Marshall of Merchants Home Lending worked with my son and his wife. Merchants is a VA-approved mortgage company focused exclusively on California transactions with offices in San Francisco, Sacramento and San Diego. “Buyers and agents often assume there will be more red tape with a VA loan than conventional,” Marshall explained. By not understanding the true advantages of VA offers, sellers are effectively shortchanging themselves. VA lending laws have changed quite a bit. “Conventional loans are now so overregulated that VA loans are often easier,” Marshall said, adding that VA loans enjoy freedoms that don’t exist for conventional loans.

“VA loans don’t have to go through appraisal management companies,” Marshall said. Because the VA works with specific, approved appraisers, the appraisals take place sooner than those for conventional loans. “It’s a privilege to be a VA appraiser,” Marshall said. “Those appraisers also get paid more because there’s no middleman.” On a rotating basis, an approved VA appraiser within 50 miles of the home has seven days to complete and upload the paperwork back to the VA. By the time the appraisal management company on a conventional loan has approved an appraiser, the VA appraiser’s paperwork would be well underway. “VA underwriters also trust these appraisers’ work to a higher degree.”

Still, many agents in a multiple-offer situation unfortunately toss the VA loan offers without consideration. “In the Bay Area, the price points are so high that vets are getting squeezed out,” Marshall said. Sellers and agents fear that the loans won’t close or that the buyer isn’t serious because of low or no down payment. But the fact is that, in most cases, VA loans close faster and easier than most conventional loans, and are especially easier than jumbo loans. With the VA, you get a guaranteed predictable outcome.

Clearly, selling your home is not a community service. But as our country thinks about veterans this week, my hope is that sellers and agents will give closer consideration to VA offers. A VA offer is not only good for the veteran; it’s good for the seller.

You can reach broker associate Gail DeMarco of Nick Sadek Sotheby’s International at 916220-5700, gail@ gaildemarco.com or at gaildemarco.com.