Hard to win a bid with a VA loan!

[ArmyStrong]

This is the 4th home I've lost out on the bidding. Trying to buy a foreclosure or REO from a bank, but I keep losing out. I don't think I've been OUT bid each time, but the fact that I'm trying with a VA loan is the issue. Each time I've been told someone from seller's agent's office has said my offer was "very competitive". As I understand it, a cash (of course cash is KING!), or conventional offer will outshine mine, no matter what I bid. I guess it's the fact that the bank can get their money faster this way. I'm told there's not as much red tape and time involved with VA financing as it used to be, and I would think banks would be knowledgable about this. I've gone thousands over asking price, and even offered up front to pay 1/2 of the closing costs. I understand that there are costs that I cannot pay because of VA. Anyone have any ideas on how can I make my offer "sweeter" in light of my VA financing?

[ArmyStrong]

bump.

[Lel]

I don't know if it's going to be possible to make your purchase offers more attractive for the types of sales that you are pursuing.

For the foreclosures, banks don't like to be homeowners, and would rather unload a property as quickly as possible that deal with any additional red tape.  Even though the VA loan process has been streamlined, it does add another level of complexity to the transaction.  The bank is already losing money on the deal, and a few extra thousand from you isn't going to make a tremendous difference to them while they're trying to get the property off their books.

With regard to short sales, since the purchase has to be approved by the bank, the additional steps to a VA loan are not going to make the offer look very attractive.

Have you considered a non-foreclosure or non-short sale purchase?  It sounds like there have been several distressed sales in you area, which unfortunately (for current homeowners and sellers) tends to depress real estate prices across the board.  You might find a good deal. 

[Jazzzy]

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@Lel wrote:

I don't know if it's going to be possible to make your purchase offers more attractive for the types of sales that you are pursuing.

For the foreclosures, banks don't like to be homeowners, and would rather unload a property as quickly as possible that deal with any additional red tape.  Even though the VA loan process has been streamlined, it does add another level of complexity to the transaction.  The bank is already losing money on the deal, and a few extra thousand from you isn't going to make a tremendous difference to them while they're trying to get the property off their books.

With regard to short sales, since the purchase has to be approved by the bank, the additional steps to a VA loan are not going to make the offer look very attractive.

Have you considered a non-foreclosure or non-short sale purchase?  It sounds like there have been several distressed sales in you area, which unfortunately (for current homeowners and sellers) tends to depress real estate prices across the board.  You might find a good deal. 

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I agree. My daughter bought a house this summer. She was in no hurry to close. She was comfortably settled into an inexpensive apartment, so no reason to hurry. The sellers of her new home ran into difficulties with having their new home built. They asked for a couple of extensions, which were no problem for my daughter. There are anxious sellers out there who would be grateful for the extra closing time.

By looking at houses now, you will get your best prices. Homes characteristically don't sell well over Christmas. My OTHER daughter proved that last Christmas. They bought a house so inexpensively (closed Dec. 17th) that the bank didn't even require an appraisal on it. The loan officer said she'd never seen that before.

OP, I don't know if this is your case at all, but too many people think they are getting a better deal by buying a short sale or foreclosure. I've seen people pay more for them than competing houses in the open market. Don't look at the seller...look at the house/price, etc. The right deal will come along if you keep an open mind.

[ArmyStrong]

Thanks for the replies!

I have been looking at foreclosures more-so than short sales. I guess I've been caught up in the hype somewhat with everyone saying what great "deals" you can get in the current market conditions. I'm beginning to realize a HUGE part is hype, from what I've learned in my journey so far. I've been searching the MLS listings for what I like, and the foreclosures seem like a lot of house for good prices (yes, I'm keeping in mind the condition of the properties, taxes, utilities, etc). Perhaps I'll sit down w/my agent and rethink my strategies again. I would be MORE than willing to consider a non-forclosure or non-short sale purchase; just so happens it seems like the homes I like (traditional, 2 story, w/basement), in the areas I like, are only affordable to me in the foreclosure market. Guess it's time to lower my expectations a little maybe. All I've done thus far is scour MLS listings, look at the listings my agent sends me based on my desires, and drive-bys. Should I contact builders directly? I think I'll try that just to see. For whatever reason, I've yet to walk into the sales office of the many new sub-divisions in the area, to check them out. **LIGHTBULB**

So again, it's not that I'm necessarily looking for foreclosures. As a matter-of-fact, at this point I'm just looking for a home with the features that I like. Not even a "deal" or a "steal". Just a fair transaction. I'll definitely keep an open mind! (and keep bidding in the mean time--you never know! )

[y0rascal]

Army, here is my advice, my friend used a Va loan and took him awhile to purchase a home. On short sales and foreclosures he always offered under asking and there is a lot of hype out there. he finally found this house he liked and he always offerred $250,000 on every house. Asking was $266,000 and was approved short sale. He met asking and contract accepted. Took awhile on the banks part but was a done deal a year later.

My advice, don't go for foreclosures its bs hype, I am currently shopping for foreclosures *only* because i am approved for the Hud NSP program which only lets me purchase a foreclosure,  but a short sale is so much easier. With foreclosures your always dealing with multiple offers and those **bleep** greedy investors.

Look for a short sale and or regular sale if you need to be in by a certain time, take the plunge and give them asking espically on a approved short sale, your chances are much higher and better. promise you, you will find a house sooner, dont cheap out on a few thousand if you really really like the house, cause you will probably not get it.

So far I have put in four offers on foreclosures and dealing with 15+ bids on each property, talk about stress, just offered  $10,100 including me paying my full buyers closing over asking price of $200k in order to get this one property that me and the wife love, Im still freaking out that someone will offer higher than me, I hate this process, buying a car is so much easier, lol.

Heed this advice, and you will be in a new home before you know it. Don't cheap out cause the prices are already good. This First time buyers credit isn't helping too much either, this is what is causing all the craziness. Point being, prices are already discounted give'em asking and report back with the good news.

good luck.

[ArmyStrong]

Thanks, Y0. That's basically what it came down to in my head. I may bid on 2 or three more, but now I'm looking into new homes. Stopped by a new sub-division today and spoke w/selling agent. They seem to be offering a lot now, including buying down points, and all closing costs.

[Homebuyer24]

It is hard for those of us with different loans.  One offer we submitted, we were asked to submit full underwriting, which we did, only to be the backup.  Yikes!  We have been told on one house we were the high offer but they went with a 10% conventional vs our 3% down payment even though we net them more. 

As for shorts, they can be great but they can also be hard to close.  One short that was preapproved, we jumped in because the first buyer backed out, but found out we had to pay 5K in PMI penalty because the homeowner was refusing to pay the penalty.  It was hard because they have lived in the home for a year paying no mortgage, both had their same jobs, and were bidding on some of the same houses we were--just using the husband's name as his name wasn't on the mortgage--his income alone qualified him for the same loan amount as both me and my husband combined--we asked if they would split the penalty with us (2500 each) and they refused.  In the end, we decided this was not the house for us based on several factors.  I have heard of other shorts where they are asking the buyer to help chip in because the banks are asking the homeowners to sign a promissory or pay for some fee.

On two other shorts we tried to get (as replacement buyers), the banks countered that we pay closing (we had asked for 3% closing cost credit)--we agreed and one we are waiting to hear about, the other bank decided to just go ahead with the foreclosure.  In both cases, it would be over 10K in additional money we'd have to put up, but we were willing to do so just to get a house.  It's really tough out there.  

Message Edited by Homebuyer24 on 12-04-2009 02:30 AM

[DallasLoanGuy]

your agent needs to sell you as a good buyer.

a good agent can explain to the listing agent that you are solid.

[JustWill]

I agree with Dallas, my broker actually made the difference in my sale going through when he stepped in dealing with the banks agent. It seems that my realtor didn't do a good job in alleviating concerns/fears/whatever regarding the VA loan process, and I saw quite a few of my offers get passed over for lower offers with conventional financing.