It just seems like discrimination, if the seller advertises "NO VA or FHA". Especially, for VA.

It just seems like discrimination, if the seller of a home advertises "NO VA or FHA".  Especially, for VA.  A soldier serves his Country, risks his life & gets treated like this.  Makes no sense to me.  Especially, when the Vet brings in a good offer on a home.
Actually, the seller is not doing the right thing for themselves, because they loose out on a huge pool of buyers.  And, when you're ACTIVE military, you have more job security. 
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September 05 2011 - Luke AFB
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Some homes do not qualify for different reasons.  It almost surely is not done for discrimination...
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August 07 2012
I understand your frustration. Anyone wiling to lay down their life for our country deserves red carpet treatment. They definitely don't deserve to be treated like second class citizens.

The reason for this "No FHA or VA" thing originates from the fact that FHA and VA loans have more stringent guidelines about the condition of the property. They will not make the loan unless all "built in appliances" are in and functional, no wires are sticking out of ceiling outlets (such as when someone has removed a ceiling fan, etc), there is no peeling paint (if the home was built before 1978), water heater must work, furnace/heater must be in and functional...and the list goes on.

In my area, there are often homes for sale with the stoves and or dishwashers removed, light fixtures ripped out, paint peeling, etc. Usually, these homes are short sales or bank owned properties where the seller will not or can not make any repairs. These won't qualify for FHA or VA loans because the repairs must be made and checked before the sale closes.
The VA requirememts can be found at http://www.veteransunited.com/realestate/14-va-appraisal-basics-for-agents/


Another instance where you can not get an FHA or VA loan is condominium associations that are not FHA or VA "approved". Here is a site to search for VA approved condos: https://vip.vba.va.gov/portal/VBAH/VBAHome/condopudsearch
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August 07 2012
I've seen many listing agents put "NO VA or FHA" in the listing because they THINK it will not qualify for a VA or FHA loan. Unfortunately, there are plenty of these agents that are completely ignorant as to what will or will not qualify for one of these loans. By advertising a property this way they are doing a major disservice to their seller. VA loans are fairly easy and hassle-free plus I've never had a VA buyer back out (knock on wood). Also, some of the agents doing this are still stuck in the past with old and out of date FHA rules which aren't even in effect anymore (i.e. mandating handrails on stairs). FHA appraisers in our area almost never make any mandatory repair requests anymore. I would seriously wonder what the motivation was behind "NO FHA or VA" in a listing. If it is a condo with a high delinquency rate then "NO FHA" makes sense.
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August 06 2012
The home maybe in need of repairs to qualify for those loans that the seller is not willing to make.
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August 04 2012
Profile picture for sunnyview
"As a seller, you risk longer marketing times by eliminating FHA buyers who are a good portion of the market these days."

True, but in a seller's market sellers can choose to eliminate any buyer that they feel as less likely to close, more likely to demand credits for required inspection items or are on the edge of qualifying in that price range.

FHA buyers are fine, but I see no reason to put an FHA buyer at the top of the pile if you also have a buyer with a conventional loan. There is no benefit to me as a seller to have to deal with any additional inspection issues if I have another option.

Excluding FHA/VA buyers in your advertising cuts your pool of buyers so I would not do that upfront, but if you have more than one offer I see no reason not to choose your strongest offer overall.
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August 01 2012
Profile picture for Pasadenan
I don't know why we are resurrecting a thread from 3/4 of a year ago, since Luke is no longer even on the website...

But if it is not one of the listed "protect classes" for the U.S. Fair Housing Act, or the U.S. Fair Lending Act, it makes no difference if it is discrimination at all.  Discrimination is a good thing, and it is perfectly legal and highly encouraged.  Just don't discriminate against any of the listed protected classes.
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August 01 2012
Profile picture for hpvanc
If the seller already knows that it will not qualify for an FHA or a VA loan, either from when they purchased or from a previous prospective buyer, don't they have an obligation to admit that material fact?  There are a few cases where those loans may require a major expense/effort to meet a requirement, even if the property is move in ready, and will easily qualify for conventional financing.
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August 01 2012

As a seller, you risk longer marketing times by eliminating FHA buyers who are a good portion of the market these days. The duration in which a property is on the market and the severity, or risk of obtaining a lower price, are affected by being picky about who you sell to.
Inspection issues can be handled if you are working with an experienced lender.

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August 01 2012
Profile picture for sunnyview
"Fha and VA loans do not affect the seller at all."
As a seller I would prefer a conventional mortgage or high down buyer over VA or FHA any day. There can be inspection issues that pop up with both VA and FHA that simply do not apply to buyers with conventional mortgages.

As a seller in a good market, why would I choose to sell to a buyer with a limited down of 0-3.5% or a buyer with more constraints on inspection issues?
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August 01 2012
Fha and VA loans do not affect the seller at all, it is truly discrimination.
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August 01 2012
Profile picture for wetdawgs
Well said Jim.
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September 05 2011
Jaci - Why jump to discrimination? More likely the condition of the home will not allow it to qualify for VA or FHA financing and they don't want to waste the buyers - or the sellers - time if the buyer is planning to use that type of financing.

VA and FHA have specific condition requirements. As an agent you should make yourself aware of what the appraiser will be looking for so that you can properly advise your clients when they are considering writing or accepting an offer that uses FHA or VA financing.

Try to see the good in people - don't assume they are out to discriminate against you or your clients!!
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September 05 2011

Jaci, wetdawgs...not sure how things are in other states, but here in AZ when an agent (or seller) advertises 'No FHA or VA' it doesn't mean the seller wouldn't review or accept those offers, it typically means that the property won't qualify for FHA or VA financing due to their VERY stringent appraisal guidelines.  The FHA & VA appraisers here in Phoenix are VERY picky, and they often flag things like peeling paint or a missing stove.  In a short-sale or REO (which make up over 60% of our sales), the seller normally doesn't have the money (or the desire in the case of a bank-owned REO) to make those repairs to allow the VA buyer to finance the home.

I see a LOT of REO agents inserting that verbiage on their listings as a way to let the cooperating agents out there know that their listing willl NOT qualify for FHA/VA due to it's dilapidated condition.  I for one appreciate that notification as it will save me a lot of time when I have an FHA or VA buyer. 
Also, their seller (a bank) will usually NOT do the necessary repairs to enable it to be financed by anything other than a conventional loan (20% down typically) OR possibly an FHA 203(k) rehab loan.

A lot of the REO sellers (banks) that we work with here in AZ do NOT like the FHA 203(k) rehab loans due to the longer escrow periods and possibility of it falling-out.

I completely agree with you that if a 'normal' seller with a home that's in good condition would agree to NOT consider a VA loan OR an FHA loan, they are eliminating a LOT of potential buyers.  Both are EXCELLENT financing products for our Veterans and the first-time buyers. 
I would use a VA loan myself if I was a Vet!

The only reason I could think that a 'regular' seller would not want to accept a VA contract would be the VA 'non-allowable' expenses; those are the fees that the buyer CANNOT pay and the seller is required to pay, usually the escrow fee and the lender's fee.

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September 05 2011
Property condition is a factor for certain financing types. Distressed properties, for example, are limited in advertisements for cash or conventional financing only when a seller doesn't have the money to repair issues that could prevent a buyer from successfully securing financing.

Here is a quick link that helps to disclose some of the conditions FHA imposes on property condition: http://www.ehow.com/list_6644325_house-condition-requirements-fha-loan.html
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September 05 2011
Yes, it's less in the seller's pocket, I agee.  So, to advertise this up front "NO VA" could be discriminating, because the buyer could offer more to cover this cost for the seller. 
I will ask the seller's agent why they've advertises this, get their reasoning and get back to you on this.
Thank you for the response.
Jaci
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September 05 2011
Profile picture for wetdawgs
Government loans place additional financial and performance obligations on the seller.  Therefore,  a seller is likely to end up with less in pocket - sometimes considerably less than if a  buyer that qualifies for a conventional loan.     

Most sellers chose the route that gives the most in their pocket with the least work.   So, while it is discrimination in one sense of the word, it sounds like it is the seller's choice.



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September 05 2011
 
Related Questions
It just seems like discrimination, if the seller advertises "NO VA or FHA". Especially, for VA.
Latest answer by Jim Trueblood
August 07 2012 | 16 answers
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