For veterans, buying a home has become more and more difficult in many cities. The reason? Many sellers are becoming wary of Veteran Home Loans, which are loans specifically geared towards members of the armed services and their spouses.
According to The New Tribune, many veterans are feeling like they’re being dismissed from the bidding war for new homes altogether. These veterans are both previous homeowners and first-time buyers.
Unfortunately, many cities are experiencing a seller’s market right now with high demand and low housing supply. That allows sellers to wield more power over the home buying process.
Josh Williamson is one of the affected veterans. He tried to bid on a home but struggled to get a foot in the door.
“We realized we were being rejected every time,” Williamson said.
Nathan Kent and his wife ran into the same problem.
A veteran of the Army for nearly a decade, he’d decided that he wanted to leave his current home for something larger, and they had started searching nearly two years ago.
“We were looking for a home all through summer 2015, and we had put in several offers at different homes,” he said.
All his offers were rejected.
Kent and Williamson, like thousands of others, were trying to pay for their homes using VA loans from the Department of Veterans Affairs, which is a benefit that both veteran and active military members earn. This benefit has been in effect since Congress created it in 1944.
Local real estate agents say that a large portion of the rejections are, in fact, due to the type of loan that the families are trying to use.
VA loans often come with red tape, appraisal delays, and fees that the seller pays, not the buyers. These are just some of the reasons that a VA loan will be rejected by a seller, in addition to a lot of misconceptions about the VA program in general.
Since its inception in 1944, the VA Home Loan has helped more than 22 million veterans achieve home ownership, and that number is still expected to grow despite these difficulties.
Pat Brewer, a real estate broker at Coldwell Banker Bain, believes that another portion of the issue is the preconceptions of the agents the sellers employ.
“I think some sellers are becoming discriminatory on the advice of their agents.”
Unlike more traditional forms of housing discrimination, such as race, disability, or national origin, a VA loan can be discriminated against because of the financing method, according to Brooke Villano, a branch manager at Veterans Lending Group.
“No agent wants to say they are discriminating against a VA offer, but that’s potentially what’s happening. Choosing a conventional offer over a VA offer is not considered discrimination.”
Sellers state that VA home inspectors are overly picky, and that can be one of the reasons for the lack of interest in dealing with a VA loan.
“When you have multiple offers coming in and you have people doing bids at the front door for the house due to the shortage that we’ve had, you can’t wait 90 days for an appraisal,” Brewer said.
To help with these delays and long waits for appraisals, there has been a pay bump, and an attempt to recruit more appraisers into the field, said Jeff London, the Director of Loan Guaranty Service at the VA.
According to London, the efforts have been “successful in significantly reducing the inventory of outstanding unassigned appraisals.”