va financing :: SoundBiteBlog.com

Here on the scenic Kitsap County WA peninsula, we are fortunate to have a very large military community comprised of Naval Base Kitsap, including the Puget Sound Naval Shipyard, Bangor Subase, and the Keyport Naval Undersea Warfare Center.

As such, many of the active-duty, active reserve, and retired service members buy homes here in Kitsap County WA using VA Home Loan financing. This is a very popular loan product of choice mainly because it doesn’t require that the Buyer contribute a down payment.

VA Home Loan rates are usually fairly competitive compared with conventional loan rates. The current VA Home Loan rate is hovering around 3.75% to 4% for a 30-year fixed mortgage, and at 3.0 to 3.25% for a 15-year fixed mortgage. The maximum loan limits here in Kitsap County WA are presently set at $417,000. However, if a Veteran elects to purchase a home with a sales price higher than the loan limit, a down payment is then required which is 25% of the difference between the loan amount and the sales price.

Here in Kitsap County WA, it is fairly common for the VA Buyer to ask the Seller to contribute towards paying a portion or all of their closing costs (typically up to 3% of the sales price).

One of the distinctions of using VA financing to purchase your home is the VA appraisal process. Not only does the VA appraiser analyze comparable market data to determine current valuation, but they also inspect the home to determine if any conditions need to be remedied/resolved prior to closing. These typically involve primary home systems such as electrical, plumbing, and heating, or structural issues, like roof, siding, crawlspace, or foundation. They also look for any concerns relating to safety like steps, handrails, and decks.

So even though you conduct a full home inspection and negotiate any needed repairs with the Seller, the VA appraiser may call out additional conditions that will need to be resolved prior to closing. Just understanding and knowing about the VA appraisal helps VA Buyers to anticipate potential issues or delays to the home buying process.

For more information on the VA Home Loan process, go to the Overview of the VA Home Loan Program.

The first part of the VA home buying process is to connect with a knowledgeable mortgage lender to determine your eligibility and budget price range. I highly recommend Rhonda Porter with Mortgage Masters. You can connect with her through her popular blog, The Mortgage Porter.

If you’re a 1st Time VA Home Buyer, or even a repeat VA Buyer, give me a call @ 360.440.4758 or email at KitsapAgent@gmail.com, and I would be honored to assist you in your VA Home Buying Adventure!

~       o       ~       o       ~       o       ~       o       ~ o       ~

Rich Jacobson is a licensed real estate professional with Keller Williams West Sound, providing knowledgeable empowerment and relentless representation for his clients of residential properties and vacant land throughout all of Kitsap County WA and portions of Pierce, Mason, and Jefferson Counties. You can also find him at KitsapLife.com, ActiveRain, and Crabbing in the Hood, or e-mail:  kitsapagent@gmail.com

Share on Facebook

Posted in VA Financing | 1 Comment »

Tags: bangor subase, Kitsap County WA, naval base kitsap, puget sound naval shipyard, va buyers, va financing, va home loans

Recently, a Seller entered into contract with a military Buyer who wanted to purchase their house using 100% financing through the VA home loan. The transaction went along smoothly enough, along through the inspection process. Then the Buyer’s lender ordered up the appraisal.

Unfortunately, the VA sent an ‘out-of-state’ appraiser not familiar with their market who used only a 1 mile radius around the subject property for finding comparable properties to determine her valuation. As a result, the home was appraised for almost 20K less than what the Buyer and Seller had agreed upon. In addition, the Buyer had also requested for the Seller to contribute $5K towards closing costs.

Both the Selling Agent and Buyer’s Agent submitted comps within a 2 mile radius of the subject property. The Buyer clients, knowing that the house was competitively priced and would not find anything remotely close in value within their price range, also got involved in writing letters to the VA.  Even the bank that was financing the deal  agreed that the 1 mile radius imposed by the appraiser was unfair and that the appraisal should be contested.  They took the agent’s comps and sent them onto the VA in a Request for Change of Value.

After more than two weeks and numerous errors, i.e.,  paperwork lost, given to the wrong person, the parties were informed that the Request for Change had been refused.  No reason or explanation was provided.

To compound their problems, the Sellers had been waiting for the appraisal results so they could act upon a counter offer for buying another house  – a house than they would now lose because other competing offers had come in on the property.

To make matters even worst still, both Buyers and Sellers will now miss their eligibility for the Federal Tax Credits being offered which end on April 30th.

This is yet one more example of the flaws inherent within the VA appraisal process and how people’s lives are impacted negatively as a result.

~     o     ~     o     ~     o     ~     o     ~     o     ~

Rich Jacobson is a licensed real estate professional providing knowledgeable empowerment and relentless representation for his clients of residential properties and vacant land throughout all of Kitsap County WA and portions of Pierce, Mason, and Jefferson Counties. You can also find him at KitsapLife.com, ActiveRain, Everyday CK, and Crabbing in the Hood, or e-mail:  kitsapagent@gmail.com

Share on Facebook

Posted in Mortgage Bites, VA Financing | 3 Comments »

Tags: bangor subase, Bremerton WA Real Estate, Kitsap County WA real estate, va appraisals, va financing, va home loans

Let me start off by saying I am a big fan of VA financing. It’s one of the few loan products available for active-duty service members and veterans that requires little to no money up front in order to purchase a home. My first two homes were financed with VA home loans, otherwise I would have been a renter for a very long time!

It’s just that I really dislike the whole VA appraisal process. While we have many highly qualified appraisers here in Kitsap County WA, and most of them do an admirable job at determining property valuations, the whole VA appraisal process is horribly flawed.

If you follow any of my blogs, you know I’ve written on this subject many times before:

VA Appraisals and the Luck of the Draw Death of a Dream:  VA Appraisals Re-Visited

Curse of the VA Appraisal VA (Very Arbitrary) Appraisals in Kitsap County WA

Challenging VA Appraisals and Other Urban Legends

The challenge of accurately appraising a home’s current value in today’s volatile real estate market can be a difficult task to begin with. Add to that the rather nebulous and seemingly ‘subjective’ guidelines provided by the VA, and you definitely have a formula for potential frustration/stress.

With the recent sub-prime debacle, and the growing rate of short sales/foreclosures, lenders have really tightened their home loan requirements. This extremely cautious level of examination funnels down to the appraisers who are working on behalf of the Buyers and Lender to ensure that the property is worth the sales price agreed to in the purchase contract. As a result, we are beginning to experience an increasing number of appraisals that are coming in ‘under’ value, or below the mutually agreed contract sales price.

In addition to determining value, VA appraisers are also tasked with identifying any major structural defects or safety issues. Unfortunately, all too many times, the definition of what constitutes a structural defect or safety issue is somewhat vague or subjective. The VA guidelines don’t provide the appraiser with any substantive definitions as to what constitutes a safety hazard or the specific requirements that must be met in order to correct them. And to compound the problem, these items are normally called out as a ‘condition’ for funding, meaning that they must be resolved/corrected prior to closing.

I’ve endured a few transactions where so-called ‘conditions’ were imposed and they ended up killing the deal. Granted, if the roof has a big hole in it or the foundation is crumbling, such issues should be addressed and resolved prior to closing.

Unfortunately, common sense doesn’t always rule the day where VA appraisals are concerned. If a window sill has chipped paint (a purely cosmetic issue) and it’s the middle of January, wouldn’t  it make more sense to paint it later in the Spring or Summer when it isn’t raining? It doesn’t matter when it comes to VA financing. If the condition can’t be remedied before closing, the transaction won’t be funded. Period.

Decks are one of those home features that typically garners a lot of scrutiny. Is it structurally sound? Does it have adequate railings? But what if the deck is only 12 inches above ground level? Are railings necessary? The VA guidelines won’t tell you. It’s completely up to the respective appraiser and what their personal interpretation/definition of a potential safety hazard is.

As real estate professionals, we work very hard and diligently to ensure that the entire transaction goes as smoothly as possible for our clients. Unfortunately, elements like the VA appraisal are outside our ability to control. All we can do is prepare our clients for the frustrating uncertainties that may occur, and deal with them as best we can.

~     o     ~     o     ~     o     ~     o     ~     o     ~

Rich Jacobson is a licensed real estate professional providing knowledgeable empowerment and relentless representation for his clients of residential properties and vacant land throughout all of Kitsap County WA and portions of Pierce, Mason, and Jefferson Counties. You can also find him at KitsapLife.com, ActiveRain, Everyday CK, and Crabbing in the Hood, or you can e-mail him:  kitsapagent@gmail.com

Share on Facebook

Posted in Real Estate Bites | 1 Comment »

Tags: bangor subase, deal killers, naval base kitsap, va appraisals, va appraisers, va financing, va home loans, va mortgages

I experienced a ‘First‘ in my real estate career the other day.

In my 10+ years as a professional agent, an appraisal for one of my listings here in Kitsap County WA came in ‘under‘ value. In other words, an appraiser was sent out to determine if the home they were buying was worth what they had agreed to pay my Sellers. Unfortunately, the Appraiser’s NOV (Notice of Value) resulted in a rather substantial shortfall.

Did I mention that the Buyer’s are using VA financing?

Yes, that’s right, the Curse of the VA Appraisal STRIKES Again!

For those of you familiar with my articles here on SBB and over on ActiveRain, you know that I’ve written on this topic on a number of occasions, such as:

“Very Arbitrary” = VA Appraisals in Kitsap County WA

“Curse of the VA Appraisal in Kitsap Couty WA“

“Death of a Dream” – VA Appraisals Re-Visited

“VA Appraisals and The Luck of the Draw“

I feel very fortunate to have gone so long without any of the homes I’ve marketed and sold have an appraisal come back ‘under’ value. Now part of that is probably just sheer luck. But a big part of it is the pride I take in understanding and knowing our local real estate market, and pricing my listings at or near market value.

So when this particular appraisal came up short, I was surprised, to say the least. Well, shocked was more like it. No, I was really pissed!

Maybe you’re in the same boat and that’s what’s brought you to this article. You’ve come to the realization that “VA Appraisals are like a Box of Chocolates – you never know what you’re gonna get!”

What are your options as a Seller when a VA Appraiser’s Notice of Value comes in low?

1.   You can agree to lower your sales price to the lower appraised value, and move forward to closing (certainly the easiest resolve, but not always the most financially prudent).

2.   Have the Buyers make up the difference in ‘cash’ at closing, or negotiate/agree to share/split the difference (unfortunately, in a slow market (Buyer’s Market) it can be rather difficult convincing the Buyer to be generous).

3.   You can Request a Change to the NOV. Some call this a ‘Reconsideration of Valuation‘ or ‘Challenging‘ the VA Appraisal.

Personally, I don’t like using the term ‘challenging’.’ It comes off as being somewhat ‘adverserial’ in nature, and the last thing you want to do is alienate  or upset the VA Appraiser!

In the VA Pamphlet 26-7,  Chapter 13, pages 26-28, it states that the NOV can be changed if either the change is clearly warranted and fully supported by real estate market or other valid information considered adequate or reasonable by professional appraisal standards, or, the issuance of the NOV involved fraud, misrepresentation or substantial VA or lender administrative error.

Your Listing Agent should be able to help formulate any supporting documentation necessary for submitting your Request of Change. Most Listing Agents normally prepare a detailed Comparative Market Analysis for their Sellers to guide them in determining market value/listing price.

The Sellers can also elect, at their own expense, to have another professional appraiser, not assigned by VA, to conduct an additional valuation, and supply that information to the Lender for consideration.

The Request of Change to the NOV must be made in writing and should be submitted to the Buyer’s Lender. The Buyer’s Loan/Mortgage Officer should be able to provide you with a fax number or email address for the Lender so you can submit your documentation directly to them.

Once the Lender receives your Request for Change, they will normally forward it onto the VA appraiser originally assigned to the file, but only if it involves a value increase of more than 5% but less that 10%. If the Request for Change involves a value estimate of more than 10%, the Lender forwards the Request onto the VA Regional Office of Jurisdiction.

Unfortunately, there is no guarantee that the VA appraiser will amend or change their original valuation findings based on any supporting documentation you provide. In the end, their say is final, and their appraisal remains in effect for a period of 6 months. This means that if you decide to terminate the contract, and put your house back on the market, any subsequent Buyers using VA or FHA financing will be required to use the low appraisal. This can have a significant negative impact on the marketability of your home and effectively reduce the pool of potential Buyers.

All the more reason for you to build a strong, persuasive case for a value increase using solid, reasonable market data.

Have an appraisal question for VA? Click HERE and go to your respective State, where you can email your question to the VA Regional Office for your area.

~  o  ~  o  ~  o  ~  o  ~  o  ~

Rich Jacobson is a licensed real estate professional providing knowledgeable empowerment and relentless representation for his clients of residential properties and vacant land throughout all of Kitsap County WA and portions of Pierce, Mason, and Jefferson Counties. You can also find him at KitsapLife.com, ActiveRain, Crabbing in the Hood, Facebook, Twitter, or e-mail: kitsapagent@gmail.com

Share on Facebook

Posted in Real Estate Bites | 3 Comments »

Tags: Kitsap County WA real estate, va appraisals, va appraisers, va financing, va lenders

As a licensed real estate professional here on the beautiful Kitsap Peninsula in scenic Washington State, I have the privilege of serving a very large military community, comprised primarily of active-duty US Navy personnel  and their dependents stationed at Naval Base Kitsap.

Given that fact, many of the Buyers and Sellers I represent are party to transactions  that involve VA Financing. As a Navy veteran myself, and former submarine sailor, I have firsthand experience with the benefits of using a VA home loan. Our first two homes were purchased using VA Financing. It’s one of the few ‘Zero-Down‘ loan products still available in today’s lending market.

I take my roles and responsibilities as an agent very seriously, especially as it relates to representing my clients best interests. It’s not about me, or what’s in it for me, but what is best for my clients and helping them successfully achieve their home buying or selling goals.

One my tasks in a real estate transaction  is anticipating any potential problems or pitfalls, and ensuring the entire process goes smoothly. This skill is acquired through an intimate understanding of the real estate business, maintaining clear lines of communication, and many years of experience as an agent.

Unfortunately, regardless of how hard I may try, there are times when certain circumstances are beyond my ability to influence or control. Such can be the case with VA Financing, and, in particular, VA Appraisals.

Many times, VA Home Buyers are under the false assumption that once the home/pest inspection is completed and associated repairs are negotiated with the Sellers, that things will progress rather smoothly until closing. However, even after you conduct the home inspection, the VA Appraiser may find additional problems (or ‘conditions’) that will need to resolved/repaired before the loan can be funded.

Case in point:   In one of my recent VA transactions, my Sellers had a large cedar deck off the back of their house. At its highest point, the deck was 24 inches above ground level. The deck did not have any railings or handrails.

In our area, VA Appraisers use the WA State Building Code to determine allowable deck height before railings need to be installed. If a deck is 30 inches or more above ground level, then railings are required. Based on this, I counseled my Sellers not to install the railings.

After the Buyer’s Home Inspection was completed, the VA Appraiser conducted his analysis. The home came in at value, and there were NO conditions. Or so we thought…..

A week or so after the appraisal, some ‘salary-justifying’ bureaucrat in the VA Regional Office in Denver disapproved the appraisal, citing a health/safety issue. The VA Appraiser was told to amend the appraisal and insert a condition that now required for railings to be installed on the deck.

When we attempted to gain some clarification on the ruling, we received a very rude and abrupt response.

“If you want the loan to fund, install the railings, PERIOD!”

I wondered to myself – “At what point/height does a deck become a safety concern? Two inches above the ground? 10 inches? 30 inches?”

You would think the VA would use some kind of uniform standard to make consistent determinations in such instances.

Unfortunately, in this instance, the determination was simply the personal, subjective opinion of someone stuck in a cubicle in Denver as to what constitutes a safety/health issue.

Luckily, we moved on from there, and the transaction finally closed. But not before a lot of unwarranted stress and delays were added to the process.

Not all VA transactions are problematic, like this one. VA Home Loans are still one of the best lending products available for veterans and active-duty personnel. Still, it’s important for Buyers and Sellers to be aware of such potential difficulties.

Got any VA Loan or Appraisal horror stories? Feel free to share. The more consumers are aware of such things, the better prepared they’ll be!

~     o     ~     o     ~     o     ~     o     ~     o     ~

Rich Jacobson is a licensed real estate professional providing knowledgeable empowerment and relentless representation for his clients of residential properties and vacant land throughout all of Kitsap County WA and portions of Pierce, Mason, and Jefferson Counties. You can also find him at KitsapLife.com, ActiveRain, Crabbing in the Hood, Facebook, Twitter, or e-mail:  kitsapagent@gmail.com

Share on Facebook

Posted in Mortgage Bites | 2 Comments »

Tags: Kitsap County WA real estate, naval base kitsap, va appraisals, va appraisers, va financing, va home loans, va transactions