The most rewarding real estate market in America today is not the luxury market, but the military market. According to Neil Brooks, a REALTOR®, a Navy veteran, and the branch manager of HomeSmart International in Scottsdale, Ariz.; Samantha Reeves, agent education manager at Veterans United Home Loans; and Denise M. Jelinski-Hall, the 3rd Senior Enlisted Advisor of the National Guard, veterans make the best homebuyers for a lot of reasons, including the benefits of a VA loan, and all the unique aspects of working with veterans.
What Is the VA Loan?
Many REALTORS® may have heard of VA loans, but still be unclear on what they are and who qualifies. “A mortgage loan is available to current service members and to veterans who meet time-in-service requirements,” Reeves says. “The VA loan is issued by private mortgage lenders and guaranteed by the Department of Veterans Affairs. What that means is that the lender lends the funds and the VA guarantees a portion of the loan. This protects the lender in case of a default by the buyer. It also makes it possible for the loan to have some amazing benefits—including no down payment and no private mortgage insurance.”
Who Is Eligible?
“If you’ve served 90 days consecutive of active duty service during wartime or 181 days of active duty service during peacetime, or if you’ve got more than six years of service in the National Guard and Reserves or you are the spouse of a service member who’s died in the line of duty or as a result of a service-connected disability, you may be eligible for these benefits,” Reeves says. Don’t worry about memorizing these numbers—the details are available at www.veteransunited.com.
Reasons to Work With Veterans
“Veterans are a tight-knit group of people. Treat them right and do a good job and they’ll pass along your name to their friends and colleagues,” Brooks says. For a good REALTOR® looking to start and establish a solid niche market, there’s none better than the military, Brooks says. Brooks, Reeves and Jelinski-Hall also explain:
- The military market is the most lucrative market in real estate. The vast majority of loans being written in the Arizona market are under $300,000 with the majority of those loans being VA or FHA loans.
- Contrary to popular myths, VA loans actually have lower interest rates than other home loans.
- Veterans can use their loan more than once.
- Veterans can use their loan to buy more than a single-family dwelling. For instance, they can buy a 4-plex, condo, townhouse or single-family dwelling, as long as it is their primary residence.
- Once you earn the benefit, it doesn’t expire—even if you served 50 years ago.
- There is no down payment required. The VA home mortgage is one of the only home loans available today with no down payment required.
- VA loans are easier to qualify for.
- In fiscal year 2017 alone, a total of 740,386 home loans were guaranteed by the VA.
- The VA will only guarantee safe, structurally sound, move-in ready, sanitary homes to ensure the home is marketable and to protect the veteran.
- Since 1944, more than 22 million veterans have utilized their home loan benefits.
- The average loan amount (in 2017) was $254,864.
- VA loans are the only loan where a buyer can get 100 percent financing.
- There’s no mortgage insurance—thus, more choices.
- VA lending guidelines are much more forgiving regarding credit scores, short sales and foreclosures.
- The VA buyer can buy a more expensive home, whereas an FHA buyer can’t, because the veteran’s mortgage insurance is actually rolled into the home price.
- VA loans will generally allow the veteran buyer with a lower credit score to qualify for an interest rate lower than a buyer with the same credit who’s obtaining FHA/conventional financing.
- VA buyers can use seller concessions to pay down the buyer’s debt (e.g., credit cards, car loans, student loans, etc.).
- VA offers “energy-efficient” loans (EEMs) for things like air conditioning, heat pumps, insulation and storm and thermal window installation.
- Veterans also tend to be more organized, efficient and disciplined and open to listening to your advice because they’re used to listening to authority.
- They’re also really good at handling stress and last-minute changes because that’s what they’re used to in the military.
How to Best Serve This Niche Market
It helps if you’ve had some military experience, or a background in the military, but it’s not necessary. Some tips for non-military REALTORS®:
- Meet your VA buyer in your office for the first meeting so you can explain the loan process and show them a “written game plan.” Don’t meet them at a house and start just showing them homes.
- Explain the loan process to the buyer so there are no surprises.
- Re-qualify the buyer to uncover any potential information that could prevent them from obtaining a VA loan. In military parlance, act as a “wing person” to the lender. Many veterans go to automated lending sites that “approve” them, and then you find out a week before closing there’s really a problem. Then they lose their money, lose their house, and have a bad experience.
- Be respectful and don’t patronize. Many veterans are shy about asking questions.
- Ensure that the VA buyer understands they will have to have some upfront money to pay for the earnest money, their home inspection and appraisal.
Ways to Break Into This Niche Market
As with any niche, it’s important to understand how to break in and where to network to find potential buyers. Here are a few ways the trio suggest:
- Educate yourself on the military, their families, and how you can best serve them.
- Explore specific certifications, like the “Did You Serve?” agent certification, in order to understand the military buyer and relate to them.
- Build a mutually beneficial relationship with a VA lender. Reciprocity.
- Contact your VA regional loan center and get involved in veterans’ organizations, and get to know the people in the “transportation office” of your local base.
- Get involved with local law enforcement. Many police officers are veterans and have a military background.
Don’t expect to glean much information from the service member you’re dealing with, the trio say. Most military members don’t even know they have home-buying options. Educate yourself, first by attending this free webinar, and then by implementing the suggestions and following up with the resources these speakers present.
For more information, please visit connect.homes.com.
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