Ken Bates
"Mr VA"
Office: 619-422-5900
Ken & Karen Bates, Mr. & Mrs. VA from Military Home Loans
Ken spent 12 years in the Navy as a Radar Intercept Officer (RIO) in the F-14 Tomcat – just like “Goose” in Top Gun. Karen served eight years in the Navy as an Air Traffic Controller & then another 8 years as a military wife (married to Ken). After Ken’s 12 years of active duty, with 3 deployments behind them, & 7 moves together, Ken’s naval career landed their family in San Diego where they purchased their 2nd home & found their life’s passion – helping other military families use their VA loan benefit to purchase the American dream – their own home.
Why? Moving, in and of itself, is stressful enough. However, it is usually accompanied by the added challenge of finding a new mechanic, hairdresser, doctor, dentist and other service providers. So, when it comes to a mortgage, it is imperative our military members have a company available with a strong reputation for knowledge of the VA Loan Benefits, the highest standards of integrity and
service, and a team who understands the unique needs of our military families.
So in 2004, Ken & Karen started Military Home Programs to meet the needs of their fellow military families. In an industry that has lost 65% of its sales force recently, they are happy to report that Military Home Loans has emerged stronger than ever, doubling production from 2008 to 2009 & remaining steady in then. In fact, Military Home Loans closes a VA loan every 3 days
Let's face it, when there's 30 offers on a property including cash, conventional, FHA and VA, it's difficult to get your VA offer accepted. Here are some tips we've gathered to help give your VA offer their best chance possible (most of these are directly from listing agents themselves):
1. Limit (or totally eliminate) Seller Credit: The less you request the better. Some clients don't have much money and must ask the seller for credit to get the deal done. This method may artificially push the purchase price up which adds concerns for the appraised value. If a buyer can pay their portion of closing costs (even if it is a gift from a family member), it's the first and most critical step to writing a competitive offer. The remainder of fees, the VA non-allowed fees, can be paid by anyone other than the buyers. The best financial option is for the seller to cover them, but that may make the offer less then competitive. Unless the agent's are willing to give up commission (not something we recommend in this challenging market), the only remaining option is for us (as the lender) to cover them. However, to do that will mean a higher interest rate (typically 0.5% higher). This is not the best financial solution, but if a rate that's a little higher is the only way to get into contract and purchase a home, then it should be presented as an option to VA buyers.
2. Show Funds: The perception is most VA buyers have limited funds, and therefore limited flexibility. This is often the case, but if it doesn't apply to the buyers, the agent should let the listing side know. One of the listing agents' biggest concerns is a low appraised value (VA appraisals aren't lower, it's just appraisers of all types can't justify what the bidding war ended at compared to the comps). The VA does allow for the VA buyer to pay the difference between the purchase price and the appraised value in cash if they choose. Most of the time, this situation causes a renegotiation, which is exactly why the listing side doesn't want to take the offer in the first place. So if the buyer agent knows going in that the clients can possibly pay the difference, let the listing side know. And of course, demonstrating a larger earnest money deposit is also another way to make the offer more attractive.
3. Address Property Condition Upfront: The VA appraisal requires a property to be safe, sound and sanitary with all section 1 termite issues corrected. Anything that violates those rules will need to be repaired prior to close. Listing agents are often concerned those repairs are going to be nit-picky, expensive and be a burden on their seller. So when a property is in anything other than perfect condition, VA is going to be low on their list. One way to combat that is to point out that the buyer is willing and able to cover all repair expenses upfront, including any termite repairs. Since the buyer will be paying for repairs to a property they don't own yet, buyer will want to be very judicious depending on their risk tolerance and financial means. But if it comes down to a $50 handyman repair, or some minor termite damage then it might be worthy it to the buyers. Obviously if the property is trashed, missing the entire kitchen, or has significant termite damage, it might make sense to just pass on it completely.
4. Flipped Properties & Fannie Mae Owned Properties: If a property is purchased by an investor and quickly flipped, it's a great option for VA purchasers. That's because the investor has already pulled the potential profits out of the property and another all cash investor probably isn't going to be bidding. For Fannie Mae owned properties, they have a goal to get homeowners into the home (not investors). So targeting these types of properties will level the playing field somewhat.
5. Personal Letters Still Count: Not all sales decisions are decided by an emotionless robot. Whether it's a regular seller or an asset manager, a cover letter explaining how motivated and committed your clients are can't hurt. One of our past buyers had their entire family in the Nap Lodge for 4 months trying to get into contract. That type of situation certainly gathers sympathy, and most sellers would like to help out our military community. That letter made the difference in their case.
6. The Lender's Reputation Matters: A pre-approval letter from a lender that has a reputation for unresponsiveness, inflexibility and delays is not going to help the buyer's case. One bad experience by a listing agent, asset manager or broker and the word will spread throughout that entire office that this is a transaction to avoid. Unfortunately, some of the major lenders that focus on military clients (you know their names) centralize their loan operations in different time zones, are famous for their phone trees and don't give you a single point of contact for issues. We on the other hand love to talk with listing agents upfront to address their concerns (and very much encourage that), we are local, and we know the VA inside and out. It's not unusual for the listing side to tell us the only reason the offer was accepted was because we were the ones doing the loan.
We unfortunately don't have any magic to push the VA up in preference for listing agents and sellers. A listing agent's job is to get the best deal for their seller, which includes both the sales price and the terms. A cash buyer who can close quickly or a buyer with a big down payment who can pay over the appraised value and not require any repairs is probably a better offer to accept. They're not discriminating against our VA clients; they're just doing their jobs.
Our mission is to address concerns, perceptions and issues upfront with the offer and possibly a call to us. We need Listing Agents, Sellers and Asset Managers to understand the VA loan is a very workable deal which can close in a reasonable time and without major headaches. We do them all the time, and just need the opportunity to prove it to them as well.
Military Home Programs
VA and CalVet Experts
619-422-5900
www.MilitaryHomePrograms.com