Hawaii Randy's Real Estate Opinions: VA Loans - Even Experienced Agents are Clueless at Times

VA Loans - Even Experienced Agents are Clueless at Times

Old DogI am amazed how many times I come across and another agent who has been in the business for a long time (over 35 years in this case) and still does not seem to know what they are doing.

I had a somewhat frustrating one last week.  After showing my buyers many properties over a few days of looking we found the one they wanted.  The seller's agent informed me they were expecting two other offers.  We put together a clean offer with no extra contingencies.  They are using a VA loan and the lender is picking up the non-allowables, leaving no extra costs to the seller.  I sent a VA Addendum and a cover letter explaining that to their agent with our offer.  I also called him on the phone and went over it with him to be sure there were no misunderstandings.

The next day their agent called me. 

  • Other Agent: Because of the extra costs to the seller associated with the VA loan they decided to counter the other offer. 
  • Me: Excuse me?  What additional costs are you talking about?  Our lender is picking up all of the VA non-allowables.
  • Other Agent: Well that covers the extra lender fees, but what about the rest of the closing costs?
  • Me: What additional closing costs are you talking about?  It was clearly stated in writing and in our phone conversation that there would be no additional costs to the seller.
  • Other Agent:  My understanding is that the seller has to pay all escrow fees.
  • They were not willing to pick up those additional costs.
  • Me:  I am confused.  Did you not get in writing that the lender will be picking up all non-allowables, which includes the additional escrow fees?  Was I not perfectly clear in our phone conversation that there are no additional costs to the seller?
  • Other Agent: You may want to check on it again, because that is not how I understand VA loans work.
  • Me:  I the last 3 or 4 years I have been involved with many transactions with VA loans and not one time has a seller had to pay those fees.  Also this is the first time I had an agent misunderstand this.

That sad part is this agent works in close proximity to several military installations and I am sure he has probably done huge disservice to several of his clients in the past and may continue to do it in the future. 

I guess it is hard to teach an old dog sometimes.



Randy L. Prothero, REALTOR®

Broker-in-Charge, ABR, AHWD, CRB, CRS, e-PRO, GRI, MRP, SFR

eXp Realty

Team Leader - "The Prothero Group"

Randy Prothero is well established as an expert in working with military / VA clients and first time home buyers.  His home seller's (listing) campaign is one of the most aggressive marketing programs in the area.  His luxury home listings sell faster and for more money.

Based out of Mililani, Hawaii. Randy services the island of Oahu (Honolulu County) Performs mediations and ombudsman services for the Board of Realtors.  To improve overall professionalism in his area Randy also offers classes for real estate agents. 

www.HawaiiRandy.comOahu (Honolulu County) Property Search  Hawaii Military Relocations

Comment balloon 25 commentsRandy Prothero • January 23 2008 07:46PM


I don't believe that agent even read your contract. 

I'm disgusted with agents who deny a VA buyer that benefit. 

Posted by Lenn Harley, Real Estate Broker - Virginia & Maryland (Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate) over 11 years ago
This sounds like the same jackleg agent i lost a battle with some months ago.  Why in the world do agents insist on hurting veterans by refusing to learn???
Posted by Leigh Brown, CEO, Dream Maker - Charlotte, NC (Leigh Brown & Associates, RE/MAX Executive) over 11 years ago

My very first deal was a VA loan and the first loan officer I went with didn't have a clue (neither did I). I was trying to do a friend a favor and use their daughter as the loan officer. She almost totally killed the deal. We had to let her go and get a loan officer that had VA as her specialty.  The seller paid NO allowables...I don't understand what's so hard to get about that.

I feel very sorry for the clients who have to deal with this agent. Sad..

Posted by Linda Scanlan (A Fan of AR) over 11 years ago

I think you hit it right on the head... teaching and learning.   Agents who have been in business a long time but don't close a lot of transactions don't have an opportunity (or a reason) to learn about VA loans.  They are operating off old information (and I mean OLD!).  It's a shame and I am so sorry your buyers got caught up in that.   For anyone who is interested, Sellers are not required to pay the unallowables if the buyer is not paying an origination fee.  Here at Fort Hood, I can't remember a transaction I've closed where a seller had to pay anything at all, since the buyer opted to take a rate that did not require an origination fee.    BUT sellers ARE paying most if not all buyer closing costs and prepaids at Fort Hood as an incentive.

Posted by Mary Ann Daniell Realtor, Delivering Successful Results Since 1999 (Coldwell Banker United, Realtors - Subsidiary of NRT LLC ) over 11 years ago

And that's why it's always important to not only have a local lender....who knows our contracts and also VA loans...but in this case it helps if the agent knows enough to instruct the seller correctly. Can you believe that?  And that's why I don't care the length of time an agent has been in the business...it's the experience, knowledge and understanding of all is involved. 35 years .....wow.  The non allowables are not all that much anyway.  geez....LO's here eat it.

Posted by Celeste "SALLY" Cheeseman, (RA) AHWD CRS ePRO OAHU HAWAII REAL ESTATE (Liberty Homes) over 11 years ago

How unfortunate for all parties!  My husband and I actually lost a home several years ago, where the relo company/contract owner denied our VA offer, not comprehending that it didn't impact them one iota.  It was a home that I had listed and sold twice in the past, and always loved.  Our home was already sold, we were pre-aprroved, and we were the easiest buyers they ever could have had.  Their ignorance of VA did us in. 

Posted by Margaret Woda, Maryland Real Estate & Military Relocation (Long & Foster Real Estate, Inc.) over 11 years ago

Randy... I will agree with some of the comments..... it's even sad when the person that you are dealing with, even the other realtor, that doesn't listen to you the first time.  Not reads what you sent over. If someone doesn't understand, shouldn't they ask questions first before assuming?

jeff belonger
Posted by Jeff Belonger, The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans ( Social Media - Infinity Home Mortgage Company, Inc) over 11 years ago

You must have run into the same guy that is in my area, I think he is getting around.

Take care!


Posted by Robert Huntsinger, Empire Realty Upland, CA - Full Service at a Discount (Empire Realty) over 11 years ago
It's a shame some agents don't bother keeping up with the times.  It's not as though it's a difficult job but it is necessary to do our jobs properly. 
Posted by Jesse & Kathy Clifton, Retired (Jesse Clifton & Associates, REALTORS®) over 11 years ago

Lenn - I am still shaking my head

Leigh - The saddest part is the community he services is next to military installations and there are a lot of ex-military.  The majority of my sales in the area had VA loans.  I wonder how many he short changed with those ideas.

Linda - I have run in to several like him in the past, but with my letter and phone conversation was always able to walk them through it.

Posted by Randy Prothero, Hawaii REALTOR, (808) 384-5645 (eXp Realty) over 11 years ago

Mary - The loan officers I work with pick up the non-allowables.  They have been doing that for some time.

Sally - My loan officer even tried to call him after we found out to better update him for future reference.  No returned phone call as of yet.

Margaret - A great example of why it is so important to continually educate ourselves as agents.  Even after all those years in the business, some agents still do not have a clue.

Posted by Randy Prothero, Hawaii REALTOR, (808) 384-5645 (eXp Realty) over 11 years ago

Jeff - I couldn't agree more.  If I question something in an offer, I pick up the phone to clarify with the other agent before I speak to my client.  I do not want to give me clients misinformation.

Robert - There are many in every area.

Jesse & Kathy - It is critical we keep up.  This business is changing every day. 

Posted by Randy Prothero, Hawaii REALTOR, (808) 384-5645 (eXp Realty) over 11 years ago
Hi Randy,
Does it just not amaze and burn you when you must deal with someone who does not have a clue.  It sounds like this agent not only did not understand but closed his mind!  Sad, pitiful.
Posted by Cynthia Tilghman, Realtor® Onslow County NC Home Specialist (Kingsbridge Realty, Inc) over 11 years ago
Cynthia - I think the closed his mind statement is right on the money.
Posted by Randy Prothero, Hawaii REALTOR, (808) 384-5645 (eXp Realty) over 11 years ago

Randy I run into that all the time here in Connecticut with our CHFA Loan Program.  There are still some Realtors just don’t get it and end up scaring their Sellers.  And it is even worst locally with the VA Loans, because most of our local Realtors do not understand this program at all.

I wish there was a way to be able to talk to the Sellers and show them what an idiot their Realtor is when this happens.

Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) over 11 years ago
George - Those agents are causing harm to their clients.  Their brokers should have some responsibility.
Posted by Randy Prothero, Hawaii REALTOR, (808) 384-5645 (eXp Realty) over 11 years ago

Most comments sound like they are from Realtors?
I'm not a Realtor. I'm a Vet who hopes to use his VA Loan benefit.
When we tell Realtors we want to use our VA benefit, it's as if we told them we have some kind of catchy disease.

I'd like to know what the nonallowables are and what are the most important questions to ask during the negotiations with the seller and lender?


Posted by Bill Rishsew almost 11 years ago

Bill - There is a list of items that the buyer normally pays, some lender and escrow fees.  The VA does not allow the vet to pay them.  They are paid by the seller normally which weakens your offer to the seller.  The loan officers I work with pick them up.

There is also a VA funding fee.  The first time you use your benefit it is a 2% charge.  It can be folded in the loan and will not be part of the needed appraisal amount.

If you find a real estate agent that does not want to work with a VA buyer, kick them to the curb and find a professional.

Posted by Randy Prothero, Hawaii REALTOR, (808) 384-5645 (eXp Realty) almost 11 years ago

In my market, VA loans are very popular since Charleston is surround by 3 bases.  VA is the only true 100% financing available anymore. It's time agents that are unfamiliar with it start taking note and learning them in and out.  It's a great option to veterans and when you compare PMI on a conventional loan to the funding fee, it's has always worked out to be a better option for my VA buyers.

Posted by Michele Reneau, Realtor, GRI ~ Charleston, SC Relocation Experts Team (Certified Staging Professional (CSP) Elite Instructor) almost 11 years ago

Michele - It is scary to think how many agents do have know anything about VA or FHA.  Shame on them.  I pity their clients.

Posted by Randy Prothero, Hawaii REALTOR, (808) 384-5645 (eXp Realty) almost 11 years ago

I admit I know very little about VA loans. In my 7 years selling real estate, there has never been a customer in my office who wanted to utilize VA...until now!  Now I am very intent on doing my homework and making sure he is able to purchase. As a matter of fact, researching VA funding is how I found this blog.

Most of us in the real estate profession had comfort zones and comfort loans and comfort programs/lenders we had utilized over and over. Yes, we got complacent. But, no more. Funding is harder and harder. I'm all for getting my purchasers funded whichever way possible!


Posted by Charlotte over 10 years ago

There are still so many misconceptions about VA loans.  I've even had buyers use VA loans to buy foreclosures this year with no problem.  The banks even picked up 4% of the closing costs and we had no inspection issues.  Agents who don't understand the process need to talk to their broker or a loan officer they trust before they convince their sellers to take a pass on a deserving buyer.

Posted by Cindy Jones, Pentagon, Fort Belvoir & Quantico Real Estate News (Integrity Real Estate Group) over 10 years ago

Charlotte - I ask ecvery buyer if they served in the military.  You may be amazed.  Also USDA offers a similar loan to non-VA buyers in many parts of the country.

Cindy - I have seen far too many buyers talked into less than desirable loans when they could have used their VA benefit.

Posted by Randy Prothero, Hawaii REALTOR, (808) 384-5645 (eXp Realty) over 10 years ago

It's been 5 months and we have yet to find a seller who will accept our offer (VA LOAN of course).

Mind you, we usually add $15,000 of the listing price to our offer and ask for 3.5% closing cost credit, $350 1-year home warranty plan, and repairs of no more than $500 for wood destroying pest.  But yet, we do not hear from the seller or they would say we are a back-up offer.  We don't even receive any counter-offer.  However, 98-days have passed by, the property is still on the market.

Price ranges from the city we are trying to purchase range b/n $99,000 to $125,000.

It's frustrating.  Like Bill, having a VA LOAN is like having a disease.


Posted by Brandon about 10 years ago

Brandon - If you add $15,000 to the list price how will it appraise?  Are you thinking the property is priced that much under market?  That fact that it still has not sold says that is not the case.

The problem may be that they have no faith you will be able to close the sale.  You may want to consider modifying your buying strategy. 

I am fortunate that I work with lenders who pickup the VA non-allowables.  The VAfunding fee is folded into the mortgage.  That portion does not need to be part of the appraisal.  The buyers monthly payments are exactly the same, the seller does not need to raise the sale price risking the appraisal.  My clients come in with very little cash and I close 100% of the ones that had a proper pre-approval from a funding lender. 

If the buyer is tight for cash, the bank will drop the origination fee for a slightly higher interest rate.  I know there has been some changes with my local banks, so that may or may not still be the case today.  I have to verify that, my last two clients did not need that.

I write VA offers regularly and get them accepted.  This case I cited above was frustrating because the agent has been in the business a long time and had no idea what he was talking about.

Posted by Randy Prothero, Hawaii REALTOR, (808) 384-5645 (eXp Realty) about 10 years ago

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