Wednesday, June 17, 2009

VA Loan - Sacramento Buyer Success Story!

I had to share a success story from a closing I had earlier this month. I represented a buyer for the purchase of a 1910 Midtown Sacramento home. The buyer used a VA loan to make his purchase. Fast forward to the end of the story - he purchased his home for $0 down, and $0 out of pocket...and gets to take advantage of the $8,000 federal tax credit for first time buyers! What!?

This story is so fantastic for a couple reasons...the first reason is that there is a bit of a stigma attached to VA lending programs. Why? Mainly because these loan programs have some terms and conditions that conventional conforming loan programs do not. Listing agents and sellers are under the impression that VA loans take longer to process...there are health and safety considerations that the appraiser must take into account...the property must have a section one pest certification...there are certain fees that the seller must pay for the buyer... The second reason this story is so fantastic, is that my client literally did not spend a dime to purchase this house...VA is one of the few true 100% financing programs left.

Sellers usually select the path of least resistance in selecting which buyer to work with. Offers with VA financing generally end up at the bottom of the stack.

We were fortunate enough to discover a property that had flown under the radar. It had been sitting on the market for about 2 months, was occupied by tenants, and the property could be shown by appointment only. We patiently scheduled an appointment several days in advance...turns out we were the first and only showing of this house. My clients really liked the house, and we immediately wrote up an offer...because of its extended time on the market, we were aggressive with our offered price and terms. We asked the seller to pay ALL of the buyer's closing costs (over 4% of the purchase price), provide a pest clearance, roof certification, among other things. They accepted the offer as written the next day!

The appraiser did his inspection of the property within a few days, and the appraisal report was received within about 5 business days. The appraiser only noted one issue that was required to be repaired prior to the close of escrow (not bad for a 100 year old house!). Pest and roof inspections were performed...both were certified with few repairs. My client did his home inspection, and there were no issues found that were objectionable to the buyer.

There was enough money in my client's credit from the seller for closing costs, that we were able to invoice the inspection fee to client did not pay anything out of pocket, and his entire $2,000 deposit was refunded to him after the close!

Anyway - buyers and sellers - keep an open mind with VA lending programs. Strategize with your Realtor on the best way to make this a win-win transaction.

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