In the short time I've been in real estate (just in my 3rd year), I haven't had to deal with a VA loan at all. I was under the impression that repair requirements were generally lax much like that of conventional (and now FHA), but I just got a voice message from the buyer's agent saying that the windows (which seals have started to let a little moisture in) have to be replaced before closing.

Can someone link me to VA repair requirements or something so that I can confirm this. It's not that my buyer's don't have the money to do it, they just don't want to mess with having to have it done, they'd rather just give them a credit at closing.

Josh

Josh

See if you can get your hands on the VA appraisal as that is likely where the notation regarding the windows came from. VA doesn't require a home inspection, nor does it warrant the condition of the home. They do require a WDO (clear termite). The appraisal likely noted it. The buyers agent may be using this as a negotiation tool to get new window/s when it could be something that can be repaired.

Good Luck

Yeah, the appraisal hasn't even been done yet so we're just waiting on that and we'll know for sure then I guess if it's required or not. Either way it's not a big deal, they've just been working on the house for the past few months and are tired of doing stuff to it.

Josh

If the window pane was cracked, I've had VA appraisers require replacement.
A leaky window seal has never been a VA requirement and I've sold many houses with VA financing.
There are minimum property standards, such as paint, gutters, slope along foundation, heating electrical and safety etc.
I don't know if VA uses this as their guide:
HUD Handbook 4910.1, Minimum Property Standards for Housing, or do they use the FHA guidelines.

It is usually at the discretion of the VA appraiser. So I would definitely wait to get the repair list from the appraiser. I hope it was written into the contract how much your sellers are liable for. I write into a VA contract that sellers will do repairs up to $XXX as required by VA.(a definite amount. If it is anything over that amount, then the buyer can do it or void the contract. Usually a credit cannot be given at closing, as the repairs have to be done and inspected before closing.

Exactly, here all offers have a cap on the amount the seller is liable for, both to protect the seller from having to pay an exhorbant amount and also to protect the buyer by letting them get out of the contract if there are extensive repairs needed.

The appraisal should be completed early this next week and I'll know then, the two windows that are bad are pretty far gone, not totally fogged over but plenty of visible moisture.

Basically it just boils down to, if the VA appraiser doesn't require it will give them a credit at closing, if he does we'll just fix it before closing.

Josh

Josh

Whatever you do, don't list the credit on the HUD as a repair credit. Have them negotiate as a closing cost credit of some sort. The lender will not be keen on seeing an unfinished "repair" being credited on the HUD.
FYI

Thanks for the heads up on that, if we end up having to do the windows before closing that's going to eat up the $500 the seller's agreed to do beforehand so the most likely there won't be any other repairs done/nor credits made but if for some reason the appraiser doesn't call out the windows then when we do the credit I'll make sure to call it a credit towards buyer's closing. Thanks again.

Josh

There are also financing fees that are charged by the Lender that the Buyer cannot pay for and the Seller has to. Make sure that amount has a cap on it other wise your Seller may have signed a blank check in regards to the $ amount. Ask for the Appraisal VC sheet in regards to the repairs. There are "Lender Required" and then there are "Buyer Wants". The VC sheet will note the "Lender Required". Good Luck!

Yeah the processing fee, underwriting fee, and tax service fee all have to be paid by the seller and I figured that in on their net sheet, it is Bank of Oklahoma (highly reputable lender) so I know what those fees will be, but yes you're right it needs to be capped, especially for some of the "shady" lenders out there who would be inclined to charge a $2000 processing fee and try to get away with it. Any other charges, such as discount/buy down points, etc the buyer would be required to pay anyways.

I'll be so glad when our new contracts roll out because they will make the financing explanations in the contract so much straight forward, right now there are a lot of grey areas in Oklahoma's financing addendums.

Lemrut

It's the appraisers job to report the truth about any deferred maintenance or safety issues. It's the lenders under writer that either accepts the condition or requires a repair. The same goes for FHA.
VC sheets are no longer required as of 1/1/06. And again, the appraiser should report all maintenance and security issues. The new FHA under writing guidelines are just that, UNDER WRITING guidelines. This doesn't give the appraiser permission to over look chipped/pealing paint, out dated electrical, aged roofing shingles, security bars with no releases, etc. It is now and always has been the lenders UW that calls for a repair or not.

FWIW when listing or buying a property, it's not hard to notice these issues, why not just fix them instead of hoping the appraiser is blind and dumb? And when representing a buyer why wouldn't you want items repaired?

Because maybe they can get a better deal if they aren't already repaired, pick out their style/type of whatever it is that is broken, there are a million different reasons... why isn't every house fully renovated and in tip-top shape before we try to sell them? I don't know, maybe because these are "used" homes, and not brand new builds? If you want something brand new, go build it, if you want a used one that may have a few quirks and squeaks to work out then do so...but to say they should be fixed in an "all-the-time" type attitude is a little ignorant.

Lemrut

I agree, but the problem is the loan may not fund, so someone has to lie, OR tell the truth and escrow the money (which most lenders will not do) OR have the buyer apply for a handymans loan OR horrors of horrors, have the owners fix it, maybe even before it goes on the market.
Again, talk to the lender, tell the truth and don't hope/encourage/pressure another industry professional to over look the problem. FWIW leaking window seals are anything but a minor issue, they don't just get better. Now that you know I'm sure a disclosure is in the works so if mold is discovered later you'll be covered. And FTR there isn't a lender out there that will allow a "credit" for this type of repair. They'll want it repaired prior or with an estimate from a licensed contractor they may allow for escrow. You won't know until you contact them. One thing I do know is that if they know about this they won't lend until it's resolved. It would be easier to deal with now instead of the day before closing.

Talk about ignorant.

I've had lenders allow credits from sellers for broken window seals quite often (not VA of course) so I hope you were only referring to VA. And I consider broken thermal pane seals to be a minor issue, not a major issue; one because it doesn't prove to be a hazardous situation, two it usually (depending on window size) is a nominal expense...of course here in Oklahoma it's not uncommon to look in any home that was built in the 80's and see broken window seals, as a matter of fact if you are looking at a home from that era with the original windows you can bet your bottom dollar there is going to be at least one or two.

As far as mold, I'm not quite sure how mold is going to start growing on the inside of the window where the small amount of moisture is, but even if mold did grow inbetween the dual panes they are being replaced (whether it's before or after closing) anyways.

I'm hoping you didn't assume I meant the windows themselves leaked moisture from the exterior of the home...I'm talking about a broken thermal barrier between the two panes, not a leaky window like a leaky roof.

Lemrut

Or you just don't accept FHA/VA buyers... if someone really doesn't want to fix something, they don't have to, unless it is very substantial and the buyer is getting a loan; i.e. significant foundation /wiring/plumbing issues, but even then they could hold out for an all cash buyer and drop the price to FMV based on these significant problems.

Lemrut

For clarification, I was talking about a double pane window seal, where the problem is more esthetic by blocking the view due to condensation in between the panes.