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We are negotiating on a house for sale by owner (the owner's daughters are power of attorney) and they have listed the house "As Is." We don't anticipate anything major but they have said they will not make any repairs. We are o.k. with that and will make any necessary repairs unless it's something catastrophic but our realtor just told them that the VA does not allow them to sell a house "As is" and they would be responsible for all repairs. Is that even true??? They are walking away from the deal and we don't want to lose it if our realtor doesn't know what he's talking about! HELP!
I think your lender can better answer your question and not your Realtor. Realtors are generally not bankers or mortgage brokers. Kind of like asking a Realtor to offer tax advice which they are not likely qualified to do so.
Your agent is partially correct. VA does not allow the buyers to pay for repairs. It's true, but you can work around that if you know what things VA will require and get them done before the appraisal.
You can buy a house as-is as long as the requirements for a VA insured loan are met. So that part isn't true.
The VA appraisal must not list any deficiencies, and even if the appraiser does not notate a "cost to cure" for something, if one of the pictures shows, say, rotting wood, or a windowsill that is in need of painting, or a cracked window, that alone will trigger an Underwriter requiring repair. And the appraiser must go back out and notate and photograph said repair(s).
Also - the appraiser can notate that the value is predicated "subject to" some things being done. This requires repair prior to closing.
As far as being "picky:" VA loans require zero down. The lender walks into the loan upside down because the VA funding fee is rolled into the loan balance. Hence, the property needs to be immediately marketable with zero cost to do so.
ADDITIONALLY: There is a mortgage Disclosure that the seller must sign that acknowledges the fact that if the appraisal does not come in at a value supporting the purchase price, with no repairs needed, that the buyer may opt out and get their deposit back. Typically, when this happens, we all huddle up and see if we can get the repairs done cheap, or reduce the price, or if the buyer is in love with the place and wants to go out of pocket on repairs or add'l down payment monies, then we do that.
The VA is there to look out for the Veteran, not the lender. As you move through the process, try to keep that in mind.
Safety and code violations are in the forefront, with cosmetic structural items to be included as items required. Paint and trim should not be chipping, grout in the tile without gaps, peeling or mildew , all appliances working. Back to safety, that includes any trip hazards.
One way to handle required repairs is to have them done prior to closing with the invoice for the repairs to be paid at the closing table from the seller's proceeds. They must be licensed contractors and the appraisal will indicate if a re-inspection by the appraiser is required.
Location: Chapel Hill, NC, formerly NoVA and Phila
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We just sold an old 1950s home to a VA buyer in Virginia. The inspector had come up with a laundry list of repairs including a rotten window sill, a non fireproof door to the garage, etc. We agreed to pay for some of the repairs in the form of closing cost help, so the repairs weren't done in advance.
We were worried, however, that when the VA appraiser came through, we would need to have a whole host of things done before they would approve the loan. Nope, he asked for two small things (neither of which the inspector mentioned) that cost under $100. We had them done by a regular handyman. The VA appraiser reinspected and gave the approval for the loan.
It ended up not being a big deal at all, but we were pretty concerned about it because of all the negatives we had heard about dealing with a VA buyer.
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