A VA loan is a benefit extended to our veterans that assists them in a home purchase with no down payment. The VA has a list of requirements that can intimidate a seller but understanding those requirements can help a seller prepare for not only a Vet, but any buyer.
The list of requirements is referred to as MPRs or Minimum Property Requirements. These are centered on protection and safety of the Veteran in the home, and the soundness of the home. Items such as the water supply, heat and air conditioning, sewage disposal, security of windows and doors and livability of the structure are evaluated by a home inspection and the appraiser.
The VA appraiser is looking not only for the home to appraise for value, but also that the property meets the safety standards required by the VA. The veteran deserves a clean and safe home. The VA appraisal can be a concern to a seller. This extra level of scrutiny added to the myth that VA appraisals are tougher to appraise for value makes a seller nervous and concerned about their extra costs to sell.
Let’s look at some of the MPRs that some sellers may need to address to sell to a veteran:
- Heating and cooling systems need to be in working order. If you have a wood burning stove for heat or use solar the home would need to have a back-up system.
- Water supply to the home needs to be safe and potable. If the home is serviced by a private well the water will need to be analyzed to meet safe standards.
- Sewer or septic must be working properly.
- Not only does the roof need to be leak proof, it must also have viable life left.
- Property must not have wood rot or termite damage left unrepaired.
- Homes built prior to 1978 with peeling or chipped paint will need to be repaired as lead-based paint may be present in the home.
- Any safety issues such as missing handrails, no GFI’s as required by code, crumbling stairs or broken windows would be called out.
Normally these concerns would come up in an inspection for any buyer but with a VA buyer the option to negotiate is not available. To qualify for the loan, the repairs would need to be made up front. It becomes a choice of the seller making the repairs or the Vet finds another home.
What about fees at closing? Many sellers believe that because the veteran is not required to bring money to closing, all fees must be paid by the seller. Here is what the seller needs to pay in addition to the normal seller closing fees:
- All the escrow fees. These are usually split between the buyer and seller in a conventional sale.
- Termite inspection.
- Additional fees for tax service, notary and other minimal fees usually $100-200.
Fees associated with the loan are NOT required to by paid by the seller, but if the seller wants to assist the Vet, they can pay those fees as well, or that can be negotiated.