Although the Department of Veterans Affairs backed a record 1.44 million home loans for veterans and service members in the past year, members of Congress and veterans' advocates said Wednesday that sellers remain leery of VA-backed loans.
Misinformation about VA appraisals, which many sellers believe are more complicated than others because homes must meet a series of minimum requirements determined by the department, has contributed to a prejudice against VA-backed loans.
"Many veterans attempting to purchase a home using a VA loan are finding they simply cannot compete," House Veterans Affairs Subcommittee on Economic Opportunity Chairman Mike Levin, D-Calif., said during a hearing Wednesday.
Sellers are less likely to accept VA-backed offers than conventional ones, according to a survey by the National Association of Realtors released earlier this year. While 89% of sellers said they were likely to accept an offer from a buyer using a traditional bank loan, only 30% said they would do the same for a VA-backed purchaser.
Sellers' fears aren't totally misplaced. The average wait time for an appraisal conducted by the VA is 14.8 business days, VA Loan Guaranty Service Acting Executive Director John Bell told the subcommittee. Non-VA appraisals can take less than two days to process.
The VA has 6,000 appraisers nationally, according to Bell, but advocates on Wednesday called for a bigger workforce and suggested paying workers more as an incentive.
"There's a shortage of certified appraisers, and VA appraisers are even harder to find," said National Association of Realtors President Leslie Rouda Smith.
Of the association's 1.5 million members, fewer than 1% are formally certified to work with veterans, active-duty service members and eligible military spouses to find the best housing options through the group's Military Relocation Professional Certification program, she said.
Higher inspection standards among VA appraisers also deter sellers from accepting VA-backed offers, said Veterans of Foreign Wars Associate Director Emily DeVito. Fifty-nine percent of sellers said stricter inspection requirements reduce the attractiveness of the VA loan, according to the National Association of Realtors survey.
"[The VFW] also recommends funding VA to conduct outreach and marketing to the public to combat misinformation on how much longer VA-guaranteed loans truly take," DeVito told committee members.
Levin said that the "trepidation of sellers" toward offers attached to VA loans is going to have to be fixed.
"We have to make sure that people are competitive," he said.
-- Mary Yang is a reporter for the Medill News Service.
Related: 4 Keys to VA Loan Approval