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Soldiering through Home Buying: A Primer for Working with the Military

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By Marc Gould

As a veteran, I know all too well that the old adage of military life—home is where Uncle Sam sends you—is hardly an exaggeration. Active duty military families move, on average, every two to three years. America’s service members and military families, who are already under tremendous strain due to the nature of military service and deployments, also have to manage the upheaval and stress from these frequent moves and relocations. These frequent moves and the circumstances of military home buying necessitate a specific knowledge base among brokers and buyer’s representatives. Here are a few key things that brokers and buyer’s reps need to know, and do, in order to help military homebuyers:

Respect the ticking clock. Military families are under a great deal of time pressure during a permanent change of station (PCS) move. Your team of buyer’s reps will need to move equally fast. It’s not unusual for a military family to look at houses and make an offer within a few days. Sometimes only one spouse will do the house hunting and decision making.

Help them take full advantage of military benefits and support. There are numerous military benefits related to housing, and it’s important for your team to understand them. Active duty military families can use the Basic Allowance for Housing (BAH)—and other allowances—to fund the home purchase. The BAH is available to active duty service members who live off base with their families, though the amount varies based on location, pay grade and dependency status. When applying for a mortgage, the BAH is verifiable income that can be used to calculate a borrower’s debt-to-income ratio.

Moreover, active duty service members, as well as those in the Reserves, National Guard, veterans, and some surviving spouses, are eligible for the Veterans Affairs (VA) Home Mortgage Loan program. These loans can be used for a number of purposes, including purchasing or building a new home. Your buyer’s reps need to know who the competent VA-participating lenders are, as well as the procedures and eligibility requirements. One key feature of the VA loan is that it doesn’t require a down payment and is available for as much as $729,000. Larger VA loans require relatively small down payments. But even with 100 percent VA financing, the buyer still has to figure in the closing costs, like the VA funding fee. If the borrower has a service-related disability, they may qualify for the lender to waive the funding fee, further reducing closing costs.

Know the lay of the land. While military families may know the procedures for making a PCS move, they rarely know the community where they’re headed. Consequently, they need to rely on the real estate professional’s knowledge of the community to guide them. Your team should also be familiar with the local rental market in order to help families determine whether it makes sense to rent or buy.

To learn more about how to serve active duty military and veterans, look for our new course debuting at NAR’s Midyear Meeting in Washington, D.C. The course will guide you on how to meet the needs of this niche market and win future referrals.

Marc Gould is the executive director of The Real Estate Buyer’s Agent Council (REBAC), a wholly-owned subsidiary of the National Association of REALTORS® (NAR). Gould achieved the rank of major in the United States Army Reserve; he began his service as platoon leader in an infantry battalion and ended as a brigade staff-officer. REBAC is the world’s largest association of real estate professionals focusing specifically on representing the real estate buyer. To learn more, visit REBAC.net.

Correction
The April 2013 REBAC Report in last month’s issue of Real Estate magazine incorrectly identified the FHA as the “Federal Housing Authority.” The correct name is the “Federal Housing Administration.”

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