Buying an REO from a VA bank

8 Replies

I am ready to buy my first house to flip (yay!) and it's owned by a VA bank. They've been slow, which I expected, but now they want things to close quickly. I think they were holding out for a vet to buy the property. Anyway, I'll be getting the P&S today and will have a lawyer look it over. Just wondering if anyone out there has had experience buying from a VA bank and if there's anything out of the ordinary that I should be aware of.

TIA

Tamara

Originally posted by @Tamara Taylor :

I am ready to buy my first house to flip (yay!) and it's owned by a VA bank. They've been slow, which I expected, but now they want things to close quickly. I think they were holding out for a vet to buy the property. Anyway, I'll be getting the P&S today and will have a lawyer look it over. Just wondering if anyone out there has had experience buying from a VA bank and if there's anything out of the ordinary that I should be aware of.

TIA

Tamara

Interesting. Was this a formal auction or? Also how responsive was the bank? Any deal info such as what % of ARV bought at etc would be great!

@Account Closed I actually found the property on the MLS. There was no "for sale" sign in the front yard.

Looking at the P&S, it's actually owned by the Dept of Veterans Affairs. We went back and forth on the price but they would only come down a couple thousand. It took about 5 days between each time I made an offer or counter offer for them to respond - so a total of 3 weeks to come to an agreed price. Once I agreed to their price, it took another 4 days for them to sign the official offer letter. They also put some conditions on the purchase.

1. It has to close by 9/25. 

2. I can only get a mortgage for the house itself. I am not allowed to get a 203k loan in conjunction with the mortgage. I will have to get a rehab loan separately after I close on the house. I think they did that so it'll close quicker. 203k loans are notoriously slow.

3. There are strict deadlines for getting the appraisal and commitment letter. If I miss a deadline they can refuse to sell the house and I lose my $1000 deposit.

So as slow as they've been to respond to me, I need to jump hoops for them. Whatever, at least I'm in the game. I have a great contractor and a lot of ambition. I can't wait to start on this project. 

Originally posted by @Tamara Taylor:

Good to hear. You were you able to inspect the property and get repair estimates before the offer? It appears the discounts vary by the market and/or property itself: 12% - 20% range in some instance; whether or not the deal is financially feasibly would seem to be a factor of if its a flip or rental and how much damage repair cost does to the discount. Some investors though would typically want to see discounts of at least 30% of ARV + repair cost.

I closed on a VA REO townhouse back in late June. It was the second VA property I had ever bid upon, and snagged it at a 11% discount to the appraised value as a buy and hold rental. The townhouse needed very little work and was practically "turnkey". The contract process took about two weeks, and involved a "highest and best" situation due to another offer. As others have said, read all the contract language carefully as the VA has their own contract template. You should have time to get an inspection of the property done after the offer is accepted, but it will likely be an "AS IS" situation. Additionally, ask the listing agent to have the darn thing de-winterized if possible to inspect the plumbing (we were able to accomplish that). Good luck!

@Account Closed They had dropped the price and then I haggled a bit so the total discount was about 16%. I'm happy with the price. And I think I can net a minimum of $15k after I sell it in a year. My contractor thinks I can make a lot more though. We'll see.

@Jade S. Glad to hear you've had good luck with VA deals.

So far I've done all I can. I had my lawyer look at the P&S and I've submitted all of my paperwork. Now it's in my lender's hands to make sure all of the deadlines are met. Fingers crossed! I've been daydreaming about shopping for flooring and tools.

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