The military population is now largely dominated by millennials. These younger service members will soon comprise most of the market to which you are selling or renting out your home. And what you might not realize is, selling in a market dominated by military first-time homebuyers has an advantage over selling in a civilian first-time homebuyers’ market. While young civilian homebuyers may struggle to save money for a down payment, young military homebuyers have the luxury of a stable, monthly housing allowance (BAH) and access to VA home loans.
The VA helps those who are eligible purchase a home at a competitive interest rate, often without requiring a down payment or private mortgage insurance. That means that they not only offer zero down payment loans, but also have lower credit requirements than alternative financing options.
As a home seller in a heavily military dominated market, consider familiarizing yourself with the lending terms of VA home loans to help plan for the high potential of receiving an offer from a buyer with a VA loan contingency.
Prepare to sell your home to a VA home loan buyer with the following points.
Research the local housing rates for your area.
- Use the Department of Defense website’s Basic Housing Allowance calculator to learn how much service members in your area are paid each month.
- Enter your zip code, and a pay grade. Unless you live close to the Pentagon, you’ll be better served by estimating housing rates on low to mid-level pay grades, such as an O3 or E5.
Estimate the mortgage payment for your property.
Using a mortgage calculator, such as MortgageCalculator.org or Bankrate’s mortgage calculator, you can input your asking price, property tax, and estimated homeowner’s insurance. Consider adding two to three percent to your asking price to account for the VA funding fee for first- or second-time VA homebuyers.
Do the math.
Do your calculations show that military homebuyers in your area will be able to afford the monthly mortgage payment for a zero down payment VA loan? If your home sale price will fit the military homebuyer’s budget, then great.
If not, homebuyers have the option to purchase your home with an alternative loan product--like state down payment assistance programs and FHA loans. If you’re in a tough selling market, consider working with your real estate agent to target homebuyers who may be eligible for these products.
Market to military.
When you market to military homebuyers, know that you’re working with a unique clientele who, unlike any other homebuyer, operate on a time crunch.
Since military families receive PCS orders for an average of three years, they don’t have the luxury to take weeks or months to find a home to buy. Instead, many families find a home within just a few days.
Knowing this about the military home buying market will help you understand why it’s critical to have great photos, a detailed description of your property’s layout, and a video home tour. Each of these marketing tools will help ensure that you make it onto your military homebuyer’s shortlist of potential homes.
Meet the requirements of the VA.
When you’re selling to someone who is using a VA Home Loan, realize that the process takes longer than that of most other mortgages.
One way to expedite this process is to make sure that there aren’t any repair issues with your home that may cause either delays for repair or an outright rejection of your home. For a few hundred dollars, you can mitigate this situation by hiring an inspector who is familiar with VA requirements to review your home.
With some simple forethought and preparation, your home should be ready to market to military homebuyers. Here’s to a successful home sale!
Written by Karina Gafford. Updated 2018 by Danielle Keech.