Question:
“I’ve heard it’s more expensive to sell with VA financing. Can you explain?”
Answer:
Happy to.
VA (aka Veteran or G.I.) financing is a government program and has certain rules. Most are to ensure that veterans only buy homes in good condition. The downside is that these rules can cost homesellers and discourage some from offering to sell with VA financing. They also make it almost impossible for a veteran to buy a fixer-upper home.
Here are the basic rules that can cost a homeseller more money:
The VA will not allow a veteran to pay certain “non allowable” fees that other homebuyers pay. These run $2,000 to $3,000 and are generally paid by the seller.
VA requires a full pest control (aka “termite”) clearance. This includes both “Section 1” (current defects) and “Section 2” (preventative). Aside from VA, homesellers rarely pay Section 2 items. Of course, some homes are “clear” and have no termite expense.
The VA has certain condition requirements and also gives appraisers discretion to call out more repairs. Most homes in excellent condition require few if any repairs.
If my client’s home is in excellent condition, I advise them to factor in the costs and be open to VA financing.
