If I Get a VA Loan Can a Seller Not Accept

By Laura Bramble

A seller can legally refuse to sell a home to a buyer for any reason they choose, including the type of loan a buyer is using to purchase the loan. Though it may not seem to make sense in a tough real estate market, some sellers do choose to reject offers that include Veterans Administration (VA) loan funding.

Most buyers believe that if they make an offer close or at the asking price, a seller will naturally accept the offer. However, selling price is only one of the considerations a seller takes into account when considering a buyer's offer. Most sellers base the worth of an offer on how much money they will receive after the sale is completed, or their net from the sale. If an offer is at full price but comes with additional costs and fees, it may be an inferior offer to another that is for less money but comes with lower costs.

One of the issues sellers have with VA loans is that there are closing costs that can only be paid by the seller but that other loan programs allow to be paid by other parties. These costs include common fees such as document preparation, administrative, underwriting, processing, transfer, tax service and notary fees. This is not a big issue in areas where it is common for the seller to pay most or all closing costs, but in other areas where sellers are not accustomed to paying closing costs, it may cause a seller to reject an offer.

VA lenders must use VA appraisers to perform appraisals on VA loans. These appraisers not only determine the value of the prospective home but also check that the home meets minimum property standards set by the VA. Though these standards are not as strict as they were prior to 2006, a home must still be safe, stable and sanitary. If a home has serious issues such as foundation problems, roof issues or structural defects, the VA will not insure the loan until the repairs are made. The seller must pay for these repairs, even if the buyer pays more for the home to compensate. Sellers who believe they would have to make this type of repair and do not have the money or the willingness to do so may choose to reject an offer to avoid going through the VA appraisal process.

Many sellers who reject an offer contingent on VA financing do so because they operate under a misconception. Some believe that because VA loans are 100 percent financing the buyer or the loan program is shaky. The VA loan program is a stable program with consistent guidelines. The lack of down payment is not a reflection on the quality of buyer. Others believe that it takes longer to close a VA loan. In actuality, it takes an experienced loan officer no longer to close a VA loan than it does a conventional loan program, even though there is more paperwork involved.

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