VA home loans: A great benefit in need of a 21st-Century renovation

  • Beneficiaries deserve to receive an equal, or better, level of service versus that of a conventional loan product.
  • The process of getting a property approved for a VA loan can be a hindrance for homeowners wishing to sell.

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It should go without saying that any Veterans Affairs (VA) benefit available to those actively serving (or for those who have been honorably discharged) should be modeled on efficiency, effectiveness and ease of use.

But those of us who have had the opportunity to work with a veteran utilizing a VA loan know that the process from contract to close can be daunting at best.

Last fall, one of my listings (a condominium that the seller originally purchased with a VA loan) that went under contract took almost 10 weeks to close and was fraught with nail-biting issues up until an hour before it finally went through.

The most serious issue was the length of time it took to get an appraisal performed. The purchasers (both veterans) were anxious, stressed and understandably downtrodden after being put through the wringer trying unsuccessfully to obtain a conventional loan product, so the VA route was their last hope.

Shortly after going under contract, their lender informed me that VA appraisals were backed up for well over a month; we would have to wait at the back of the queue until they had been cleared. Ugh.

The appraisal did not take place until three days before the scheduled closing date.

Once completed, the overworked appraiser contacted me to explain that the contract purchase price wasn’t lining up with his pulled comparables within same complex, even though those units had sold at (or close to) the purchase price as the subject property but were in poorer condition overall.

At the appraiser’s request, the buyer’s agent and I scrambled at the 11th hour to do some “value building” by submitting our own (!) appraisals, in hopes of convincing him to increase his number and eek out a higher figure. My seller was not going to lower the sale price (it was not priced incorrectly).

We were able to convince the appraiser to up his number, but my client took a $2,000 haircut to get the deal done.

At closing, the lender expressed shock in hearing that an appraiser upped the final evaluation post-appraisal — a rare sequence of events. Phew!

Making a condominium eligible for a VA loan to begin with is often viewed by sellers as a turnoff when they find out it is time consuming and expensive.

Accomplished using FHA guidelines by a third party (FHA Review) submission service, it necessitates a lengthy list of documentation obtained from the respective HOA (homeowner association), costs $850 and can take up to 90 days.

For others, the nail in the coffin is when they discover the appraisal will stick to their property for six months should the deal go sideways.

As for the real estate professional, it can be frustrating to ascertain whether a property is VA-approved when utilizing the VA web portal.

Properties are not always listed by their respective address in the database, and often we find that information is either missing, misspelled or outdated.

Contacting a VA loan service center to obtain help can result in the representative directing you back to the web portal.

Herein lies an opportunity for the VA to renovate the entire process.

E.J. Footer is an Associate Broker at House2Home Real Estate in Denver, Colorado, and comes from a family with a long history of being associated with the real estate industry. He has flipped, renovated, and restored many homes and co-founded a real estate technology company in 2014. Follow him on Facebook or Twitter

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