VA Buyers and Multiple Offers

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I was recently involved in a multiple offer situation from the listing side for a home that was on the market for 2 days.  There were a variety of offers which included a VA offer.  The buyers agent failed to provide the AAR “required” prequal form with the offer and as such, I was unable to contact the lender directly to verify what exactly the lender was going to charge and how much “exactly” it was going to cost my seller.  As you may or may not know, there are some “non-allowable” costs the “VA” buyer cannot pay and therefore the seller must pay these costs.  They are in general the following, but not limited to:

  • Tax Service fee
  • Application fee
  • Doc Prep fee
  • Underwriting fee
  • Processing fee
  • Courier fee
  • Termite inspection and/or treatment
  • Escrow or settlement fee
  • Express mail, shipping or handling fees
  • Email or edoc fees
  • Administration fees
  • Wire fees
  • Notary fees
  • Copy fees
  • Loan tie in fee (title companies charges this for processing of new loans)
  • Sub escrow fee
  • Verification fees

These fees can amount to approximately 1% of the sales price (VA loan amounts are typically the same as the sales price since VA buyers get 100% financing).  In our case, that amounted to approximately $3,000.

We informed all offering parties of the multiple offers and gave them 24 hours to re-submit highest and best offers.  Had I been the buyers agent and in order to make the VA loan offer more attractive, I would have offered to pay the owners title insurance policy and home warranty at minimum to offset those costs typically paid by the seller and that would have taken care of most of the estimated $3,000.  This particular buyers agent did not feel the need to do so and therefore another offer was accepted.  Additionally VA appraisals can be problematic.

So while the VA or federal government in their infinite wisdom require that sellers pay these charges, in many multiple offer situations, they are the least desirable offers to accept and in my opinion have hurt our veterans more than helped them.  There are sellers that absolutely will not accept VA buyers and have listing agents note the MLS for the aforementioned reasons.

If you’re a VA buyer and get involved in a multiple offer situation, consider what items the seller customarily pays and offer to pay those items to offset the “required” costs seller must pay in order to make your offer more attractive.

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