Property values and rent across the U.S. are on the rise. For many aspiring first-time homebuyers, market conditions may seem increasingly challenging to overcome, with no signs of slowing down soon.
One solution you may not have considered is VA real estate owned (REO) properties. You may be surprised that VA REO properties are available to all eligible homebuyers, and they come with many benefits. These properties don't always have all the bells and whistles of a new home, but with a little effort and customization, they can transform into great homes with unique charm.
What is a VA REO property?
VA real estate owned (REO) properties, also known as bank-owned homes, are properties the VA repossessed after the previous owner defaulted on their loan. VA-owned properties are available to anyone, even if you don’t use a VA loan to purchase the property.
Since you may not be as familiar with VA REO homes, here are five tips to consider during your home search:
1. VA REO Homes are Available to Everyone
The first perk of VA REO homes is that Veterans, civilians and investors can purchase them. While the VA primarily serves Veterans, service members and their families, you do not have to meet a service requirement to buy a VA REO property.
Furthermore, you do not have to use the home as a primary residence, opening the door for investors. The occupancy requirement for the home depends on your financing. VA REO homes can become great vacation and rental properties.
2. VA Vendee Financing Benefits
VA loans are well known for having exclusive benefits that simplify the homebuying process for the military community. Homebuyers purchasing a VA REO home can enjoy similar benefits when utilizing VA Vendee Financing.
What is VA Vendee Financing?
VA Vendee Financing is a loan option available to those purchasing VA REO homes, which includes both civilians and members of the military community. This financing offers competitive interest rates and a spectrum of benefits to borrowers.
The benefits of VA Vendee Financing include:
- Low or no down payment
- Origination fees can be rolled into the loan for eligible borrowers
- Funding fees may also be incorporated into the loan for eligible borrowers
- Flexible loan terms of either 15 or 30 years
- Sellers are allowed to contribute towards closing costs
- Mortgage insurance is not required
- No restrictions on the number of VA REO properties that can be owned as investments
- No VA appraisal is required
- Loans with VA Vendee Financing are assumable
With these perks in mind, buying a home with VA Vendee Financing can have far more incentives and fewer barriers than using a conventional loan.
3. Properties May Have Less Safety
While VA REO homes offer numerous advantages for potential buyers, it's essential to recognize that they also come with fewer safeguards than other home types.
For starters, VA REO properties are often sold at public auctions, which can drive up prices and lead buyers to make quick decisions without conducting thorough due diligence. VA REO properties are typically sold "as-is," meaning the buyer assumes responsibility for any necessary repairs or renovations.
Additionally, VA REO property sellers may not provide the same level of property disclosures as private sellers. Buyers may have limited information about the property's history, potential issues or defects, limiting their negotiating ability.
4. Homes Often Require Repairs and Maintenance
Because VA REO properties are put on the market as a result of foreclosures, the previous owners often leave the homes in poor condition. They're commonly sold as-is, and the VA generally won't make requested repairs like a private seller might.
This can lead to unforeseen costs, which may exceed your budget. If you're ready to commit to a VA REO property, be prepared to make a serious financial investment toward inspections, repairs and maintenance. If you are using a VA loan, the property must meet VA Minimum Property Requirements.
5. VA REO Property Listings Available Online
VA REO homes are for sale online through VRM Mortgage Services. If you're ready to start exploring VA REO property listings, contact Veterans United Realty to be placed with a qualified real estate agent in your area.
With proper planning and budgeting, the perks of VA REO homes can outweigh the quirks, helping you achieve your dreams of homeownership.
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