If you are selling your home, you want to ensure that a potential buyer can secure a VA loan for the property. The Department of Veterans Affairs has two primary concerns when it comes to deciding whether it will approve a loan:
- Is the home structurally sound, safe and free of hazards?
- Does the home appraise at fair market value?
If a house is deemed unsafe, the VA will not approve the loan. If the property is appraised below market value, a buyer will need to be able to make up the difference between the appraised value and the contract price, if they are intent on moving forward with the purchase.
Home updates address both obstacles for a buyer intending to use their VA loan benefit. As a seller, updating your home to ensure it is safe and free from hazards will ensure the VA loan will be approved.
Before you decide to remodel the kitchen or rip apart that bathroom, make sure that you are working with a real estate agent who is experienced with VA loans. VA loans are a unique loan type. Not every real estate agent is aware of all the intricacies needed for VA loan approval, and your money might be better spent on other home updates.
Safety (and Structure) First
While kitchen and bathroom remodels are good for an asking price, and potentially for market value, your sale is doomed if you can't get past the VA's minimum property requirements. Here are a few of the issues that can wreak havoc on a VA loan approval:
Depending upon the state, the lender and the contract, you may be required to certify that the property is termite and pest free. Termite inspections are typically only good for 90 days for lending purposes. Once a contract is pending, budget for these inspections so they are current and up to date at the time of the sale.
Mold, Fungus and Dry Rot
If found, these conditions are required to be reported by an appraiser. As with pest control, address these potential issues before they are a red flag in the purchase of your home.
Have your roof checked by an expert before the pending sale. Your roof should be free of holes or damage. Even a minor problem with your roof can cause major problems for a buyer trying to get a VA loan. Roof problems can lead to interior damage as well as damage to your home's foundation down the road. From a prospective buyer's perspective, your roof is one of the first things someone will see when they pull up to your property.
Plumbing, Heating and Electrical Systems
You must have the basics: running water, working electricity and sufficient heating. There should be no safety issues -- such as concerns about an outdated water heater that's prone to explode or an electrical system insufficient to provide for the demands being made on it. Do your pipes need to be insulated or replaced? Can your house sustain a comfortable temperature? What's in your home should work properly and should be consistent with the age of the home.
This includes your appliances. While you are not required to include them in the sale, if they are a part of the contract, they should be in working order. You should remove things that may not pass inspection, like a nonworking stove, for example.
A broken window or an improper seal may not seem like a dealbreaker, but it can be. Not only can it impact the ability to maintain a home at a proper temperature, but it can also affect public perception. Broken windows are a sign of neglect or lack of care. They suggest that if the little things haven't been addressed, then there may very be larger issues with a home.
Smoke Alarms and Carbon Monoxide Detectors
Inspectors often call out a home without properly placed, working smoke alarms. Check your local codes or ask your real estate agent for guidance regarding what is required where you live.
Have you heard the phrase "lipstick on a pig?" Its meaning is as great as it sounds. It means that no matter how pretty you make the house look, if it doesn't have functioning heat or air conditioning, a buyer will still see a home without functioning heat or air conditioning. This is not the goal when preparing to sell your home. Once you've addressed any structural or safety issues, then you can focus on aesthetics.
While the VA does not care about the age of a home or any questionable taste in color schemes, carpet choices or wallpaper, the aesthetics do matter when it comes to getting fair market value. Here again, your best resource is your real estate agent. They know the local landscape. They're on top of what potential buyers are most interested in. Let that knowledge and feedback inform any choices you make to your home with the hope of increasing its fair market value.
Find a VA Loan
If you're ready to move forward, or just want more information, the first step is to get no-obligation rate quotes.