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Finding your dream home is the fun part. The challenge is crafting a purchase offer that entices sellers, protects your interests, and maximizes your budget.
Veterans and military buyers should lean on their real estate agent for help to strike the right balance. A seasoned agent is your best advocate and expert, whether you’re preparing to purchase at your new duty station or searching for your retirement home.
Here’s a look at a few key considerations when it comes to making an offer on a home.
Come to the table prepared
Pre-qualification is a good first step, but it’s also a basic one. You’ll want to go a step further and get pre-approved for your home loan before you start your home search. It’ll give you a realistic idea of what you can afford, and you’ll be ready to make an offer if you see a home that you love.
For veterans and service members using their VA home loan benefits, the good news is you won’t need any money down in most cases. Yet the seller should know that you’re a highly qualified buyer, because you’ve gone through a rigorous screening process.
Some real estate agents won’t accept an offer on a home without a copy of the buyer’s pre-approval letter.
Look for something Uncle Sam would love
If you’re using FHA or VA financing, the home you select will generally need to be in move-in-ready shape. The appraisal process for government-backed loans includes a broad assessment of the property’s condition.
“Buyers can get really impressed with a house, but it’s my job to make sure that the price is going to line up in terms of the VA appraisal,” says Duan Rockette, a real estate agent with Berkshire Hathaway HomeServices Select Properties and a retired Marine Corps First Sergeant.
That appraisal doesn’t just look at whether the home is worth the price you offer for it, but also whether it meets the VA’s minimum property requirements.
“I try to be open and upfront with the seller, even before writing the offer, asking them if they’re willing to address any repairs that may be an issue from the point of view of VA guidelines,” says Elisha Gutloff, a broker at Keller Williams in Raleigh, NC, who has worked with many veteran buyers.
The goal is to make sure buyers don’t purchase a home that’s unsafe or that could be difficult to sell down the road. You probably want to steer clear of fixer-uppers—and you might even get some concessions from the seller.
“With one home, the inspector came back and determined the carpet wasn’t sanitary, so the buyer got new carpet in the stairway and the first floor,” Gutloff says.
Have a backup—actually, have several
As any active-duty military family knows, sometimes you need to find a home, double quick. That means that if your first choice falls through, as often happens, you need to have a second choice lined up. And a third. And a fourth.
“I set the expectations with the buyer that it’s not a deal until you have that contract accepted,” says Rockette.
Protect yourself
Talk with your agent about what kind of contract contingencies you might need. Many would-be buyers insist on a home inspection contingency. These allow you to get an in-depth look at the property and reopen the contract to negotiation based on the results.
You’ll also want to safeguard your earnest money deposit in case the deal falls through because of a low appraised value or another issue beyond your control.
This isn’t something VA buyers have to worry about—these loans automatically protect a veteran’s earnest money in the event of a low appraisal. Consult with your agent if you’re using a different type of financing.
Pay attention to closing costs
While first-time buyers often focus on the sale price of the property, the reality is that they’re likely financing the total sum over a period of 15 to 30 years.
“You may bring the price down by thousands of dollars,” Gutloff says. “But it’s only between $5 and $20 a month.”
On the other hand, closing costs require the buyer to come up with cash in a lump sum. So Rockette encourages his buyers to ask the seller to cover closing costs, even if it means offering a slightly higher purchase price. (Also, the VA does not allow buyers to pay certain types of closing costs.)
In any mortgage transaction, how much a seller can pay depends in part on the type of financing you’re using. It’s typically anywhere from 3% to 6% of the purchase price.
When it comes down to it, making an offer on a home comes down to being prepared and organized. Knowing all this will help you evaluate your housing choices with clear eyes, make an offer, and buy a home where you can settle in and build the next phase of your life.
NMLS 1907 (www.nmlsconsumeraccess.org) Veterans United Home Loans is not endorsed or sponsored by the Dept. of Veterans Affairs or any government agency; does not reflect DOD endorsements. Equal Opportunity Lender. 1400 Veterans United Drive Columbia MO, 65203.
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