Kathy A. Torline-Nordstrom
ERA Herman Group Real Estate
Serving Colorado Springs
It’s important for buyers and sellers to understand Colorado VA loans
VA loans can provide a wonderful option for buyers who wants to purchase house with very little money down. They were originally designed to help all vets purchase a home. It can make it much easier for a buyer to purchase with no money required for a down payment. The seller can also be asked to pay for 100% of the buyers closing costs, so a buyer can get into a home with very little money.
All properties financed through a VA loan must undergo a VA appraisal and meet VA Minimum Property Requirements (MPRs). Some MPRs are very precise, while others give appraisers room for interpretation.
When a Colorado Springs Realtor lists a home for sale and enters the information in MLS (Mutiple Listing Service); an agent is required to designate the type of financing a property is qualified for. Often times houses that are bank-owned and many short sales have not been kept in good shape and many of them don’t qualify for a VA loan. And most owners of REO’s and short sales are selling the properties “as-is” and won’t take care of any repairs required by the VA appraisal.
Understanding VA appraisals is also important for sellers; as in January 2013, 238 buyers used VA loans to purchase a home. Approximately 33% of the buyers used VA loans in the Colorado Springs area; so it’s important for sellers to make sure their homes will pass a VA appraisal without requiring appraisal conditions. I’m sure sellers don’t want to exclude 33% of the buyers from looking at their home and possibly making an offer on it.
Here’s a summary of some of the major MPRs for any real estate agent and VA buyer to consider:
1. Property must have space necessary to assure suitable living, sleeping, cooking and sanitary facilities. Make sure the home has an adequate kitchen, bathroom and sleeping area. If the home doesn’t have a stove, this can cause a VA appraisal condition.
2. Mechanical systems must be safe and electrical and plumbing systems must also be in good repair and have some usable life remaining.
3. Heating must be adequate. The home’s heating system must be safe and adequate. For this reason, homes that employ the use of a wood stove as the main heat source must have a secondary heating system that can maintain a minimum temperature of 50 degrees in plumbing areas of the home.
4. Property must have domestic hot water, a consistent supply of safe drinking water and a safe method of sewage disposal.
5. Roofing must be adequate and provide reasonable future utility. The roof condition will be closely examined by the VA appraiser. When a defective roof with three or more layers of shingles must be replaced, all old shingles must first be removed. If there is visible sign of a roof leak, this will be probably be noted in the VA appraisal and be required to be repaired.
6. Crawl space must have adequate access, be clear of all debris and be properly vented. Any excessive dampness or pooling of water in the crawl space must be corrected.
7. No defective conditions which impair the safety, sanitation or structural soundness of the dwelling. Appraisers are advised to watch for defective construction, poor workmanship, evidence of continuing settlement, excessive dampness, leakage and decay.
8. Lead-based paint must be evaluated and corrected. Properties built before 1978 must be inspected for lead-based paint. Surfaces with cracked or chipped lead-based paint must either be scraped and repainted, covered with drywall, or totally removed. Appraisers must assume that a defective paint condition (involving cracking, scaling, chipping, peeling, or loose paint) on any interior or exterior surface of properties built prior to 1978 involves lead-based paint
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