Why Sellers Shouldn't Be Afraid of the VA Loan

Sarah Woodbury Sarah Woodbury / Published Sep 26, 2019, 2:21 PM

Why Sellers Shouldn't Be Afraid of the VA Loan

Common VA Loan Misconceptions & Facts Every Seller Should Know

Some sellers have heard things about the VA loan that make them hesitant when VA borrowers come knocking at their door. They begin to wonder if VA loans are bad for sellers, and they may even end up turning away veterans who are looking to buy a home using their VA loan benefits.

Rumors that VA loan seller disadvantages outweigh the advantages are simply not true. And because these rumors may keep sellers and veterans from perfectly good transactions, they can actually be harmful.

To put it simply, sellers should be excited to work with veterans! Not only are you supporting those who have served our country by allowing them to use their hard-earned benefits, but you are also enjoying the benefits that come with working with US veterans.

Check out our video below for an overview of what a VA loan means for the seller.

Keep reading for more details on how VA loans affect sellers and why working with VA buyers isn't much different than working with any buyer.

Sellers Can Choose Whether or Not to Pay Concessions

Because the VA prohibits veterans from paying certain fees on VA loans, some sellers mistakenly believe the myth that sellers are required to pay these costs on VA loans.

The truth is that both conventional and VA loan buyers can request that sellers pay some closing costs or fees on their loan, called concessions.

Like with any other loan type, a seller is not obligated to pay any costs a VA buyer asks them to. Buyers can ask for seller concessions on any kind of loan, but it's up to sellers to choose whether or not they want to pay for some closing costs during negotiations.

Even the VA's non-allowable fees don't have to be paid by sellers. They can be paid by any other loan party, including the real estate agent or lender.

Before making the decision to pay or not pay concessions, it's important for sellers to know that in some cases, paying for some of the closing costs can actually be beneficial.

For example, in a buyer's market, making some concessions can give you a competitive edge over other sellers and help you sell your home faster.

Plus, home sellers who decide to pay concessions often make up for these costs by either:


            Increasing the Home Price                        Holding Firm on the Listing Price


You can increase the home price an amount that will cover what you agree to pay for the buyer on closing costs and fees. Or, you can hold firm on the listing price, since paying some closing costs may give you bargaining power if the buyer asks for a lower price in addition to concessions.

For more details on how seller concessions work with VA loans, check out our video below.

The Loan Process Is Simple for Both Buyers and Sellers

Automatic Authority Streamlines the Process

Some sellers are concerned that because the VA loan is backed by a government agency, selling their home to a buyer with this loan type will be a long or complicated process.

While buying with a VA loan used to take longer than other loans since the requests had to be processed by the VA, now lenders can be granted automatic authority, which has helped make the VA loan process quick and simple.

What Is Automatic Authority?
Automatic authority is when private lenders are authorized by the VA to process loans without going through the VA.

It's also helpful to know that VA loans are government-backed, not offered through the government itself. Private lenders are the ones who actually offer VA loans. And most lenders who are serious about the VA loan seek the aforementioned automatic authority from the VA.

This VA authority allows the VA loan process to move smoothly and operate similarly to conventional loans, removing many of the complexities that made the loan process a bit sluggish in the past.

For the simplest process, ask the VA buyer you're working with to use a lender with VA-granted automatic authority.

Appraisals for VA Loans Aren't Much Different than Those for Other Loans

Keep in mind that the appraisal on a VA loan is more strict than one for a conventional loan because of the required Minimum Property Requirements (MPRs) that must be met. These MPRs ensure that those who have served our nation are not buying unsafe properties.

Minimum Property Requirements look for evidence that the home is safe, structurally sound, and sanitary

You can find out more details on what these three "S's" mean by watching our video about the VA Minimum Property Requirements.

Basically, if your home is in good shape, the appraisal should pretty much be just like an appraisal for any other kind of loan. Even with a few extra requirements, the timeframe for VA loans is quite comparable to any other loan type, only taking 2-3 days longer, on average.

Another way to streamline the appraisal process is to make sure that your veteran buyer is working with an agent who is familiar with VA loans. Because VA-familiar agents know the ins and outs of the process, it's less likely that there will be agent-caused delays.

Want more tips to make sure your appraisal goes as smoothly as possible? Watch our video below to learn why homes may fail the VA loan appraisal and what you can do to prepare.

Veterans Are Reliable

When it comes to mortgages, veterans of the US military are the most reliable group in the nation. Of all loan types, VA loans have the lowest foreclosure rate in the country.

Soldier saluting in front of a list of veteran values: duty, integrity, ethics, honor, courage, loyalty, excellence, respect, selfless service, commitment

Why is this? Well, veteran culture includes many honorable values that make them a great group to work with.

This is meaningful to sellers because with priorities like goal-setting, honesty, and loyalty, veterans tend to follow through on their agreements and have likely thought carefully through the decision of homebuying before looking at homes.

Despite this reality, some buyers may be concerned that a veteran putting $0 down could mean something about their reliability or assets, or that their higher offer on a home signals that something fishy is going on.

However, veterans commonly put nothing down because of the no down payment requirement of the VA loan, which may free up funds to make a higher initial offer. This doesn't mean anything negative about the veteran; it simply means they're using the benefits they've earned through their service.

In addition to the fact that veterans and servicemembers are some of the most grounded and dependable people to work with, working with someone who has helped secure your freedom is a great opportunity to say thanks and give back.

The Bottom Line

If you have the chance to work with a US military veteran or servicemember, don't turn them away because of rumors you may have heard.

If you've heard anything else about VA loans that makes it sound questionable for the seller, please leave a comment below or contact us. We've been working with VA loans for over a decade, so we know the ins and outs and can help you navigate what VA loans mean for you as the seller.