Selling Your Home to a Buyer with FHA or VA Financing

A popular home loan program with veterans is a VA loan and a common loan program for first-time homebuyers is an FHA loan. As a seller, with all things being equal, your best offer is from a cash buyer.  The next best offer is from a buyer with a conventional mortgage loan. Selling your home to a buyer with FHA or VA financing can be a fraught process. This is my own opinion based on my experiences as a Johnson County, Kansas real estate agent for many years.

It is important to thoroughly understand that we are in an extreme seller's market. Sellers are in the driver's seat and they rarely accept offers using an FHA or VA loan. Why is that? Read below to find out exactly why that is.

With an FHA or VA loan, the appraisal adds another step, which is like an inspection. Many buyers are having to waive their right to a home inspection just to buy a home. So why would a seller want to deal with an FHA or VA appraisal/inspection? They don't.

That appraiser may add a whole other list of items to be repaired like adding a stair rail, splash blocks, or even repainting sections of the home (no peeling paint is allowed.) Most sellers become unhappy about having to go through this, and who can blame them?  The worst part is that there is no negotiating here; sellers must do what the appraiser says or kill the deal.

When I list a home for sale, I display “Cash” or “Conventional” in the multiple listing service (MLS) most of the time. This eliminates the extra headaches for my sellers. However, it may limit your number of potential buyers if your home is in a price range where this type of loan program is common. This is just one of the many things to think about when listing your home for sale. I will always give you a list of all homes that sold in your area in the past year (“comparables”) so that we can see what kinds of loan programs are typically used.