A listing agent's honest guide to VA offers
A VA offer lands on your listing and the seller asks the question you have heard before: should we be worried? Short answer, no. Most of what sellers fear about VA deals is folklore from a different decade. Here is what the program actually requires from your seller, written for the listing side.
I can assist with your home loan in 49 states, excluding New York.
What a VA offer actually asks of your seller
Almost nothing that any other offer does not. The buyer brings a federally guaranteed loan with no down payment requirement and no monthly mortgage insurance. Your seller conveys the home, pays their own customary seller-side costs, and negotiates everything else exactly like a conventional deal. The two genuinely VA-specific items are the appraisal process and a small list of fees the veteran is not allowed to pay, both covered below.
The appraisal, including the part nobody explains
The VA appraisal does two jobs: value and minimum property requirements. The MPRs are health-and-safety basics, like safe mechanicals, a sound roof, no peeling paint on older homes, and on a typical, maintained Phoenix-area listing they are a non-event. The repairs VA forces are generally things the next buyer's inspection response would demand anyway.
On value, VA actually gives your seller more process than a conventional deal does. Through the Tidewater procedure, if the appraiser expects to come in under contract price, the parties get notice and a window to submit comparable sales before the value is finalized, and there is a formal reconsideration-of-value path after that. A conventional appraisal usually just lands, take it or leave it.
The 4 percent rule, which is not what most agents think
The myth: "sellers must pay 4 percent on a VA deal." The reality: sellers must pay nothing. The 4 percent figure is a cap on true concessions, and ordinary closing costs do not count against it. If your seller agrees to pay the buyer's title fees, origination, or discount points, that is not a concession under VA rules. The cap applies to extras like prepaids beyond what is customary, paying off the buyer's debts, or paying the buyer's funding fee. Full breakdown on the seller concession cheat sheet.
The short list of fees the veteran cannot pay
VA bars the veteran from paying certain charges, like a lender's attorney fees and some processing items. In practice the lender structures around this list routinely, and it rarely changes the seller's net in a material way. Where it shows up in Arizona contracts, I flag it for both agents before it becomes a surprise. The rules on items like the termite inspection have also loosened in recent years, so do not let a pre-2020 memory of "the seller always pays for termite" steer the negotiation.
Why a VA buyer is a strong buyer
- Residual income test: VA underwriting requires the buyer to show real monthly cushion after all obligations, a stress test no other major program runs. VA approvals are sturdy.
- Historically strong performance: over the long run, VA loans have been among the better-performing programs on foreclosure rates, which is the actuarial version of "these buyers close and stay."
- No down payment does not mean no money: plenty of VA buyers have savings; they are simply not required to spend it all at closing, which leaves them more resilient through escrow.
How to vet the VA offer in front of you
Judge the lender, not the program. Ask whether the pre-approval was issued after a real review of income, assets, and the certificate of eligibility. When I issue a VA pre-approval it means exactly that, and I am happy to take a call from the listing side on any offer my buyers write: (610) 999-4710. More background lives in our VA loans guide and the Phoenix VA article.
Frequently asked questions
Does the seller have to pay the buyer's closing costs on a VA loan?
No. Sellers are not required to pay anything on a VA deal. Sellers may agree to pay buyer closing costs, exactly as on any other loan, and ordinary closing costs do not count toward the VA 4 percent concession cap.
Is the VA appraisal stricter than a conventional appraisal?
It adds minimum property requirements, which are health-and-safety basics that a typical maintained home passes without drama. On value, VA offers more process than conventional: the Tidewater procedure lets the parties submit comps before a low value is finalized, and a reconsideration-of-value path exists after.
Can a seller refuse a VA offer?
A seller can choose among offers on their merits, but steering away from VA offers on autopilot costs sellers real buyers, and in some situations blanket refusal of federally backed financing invites fair housing scrutiny. The better play is to vet the lender and the pre-approval like any other offer.
Do VA loans take longer to close?
A prepared VA file closes on a normal timeline. The horror stories almost always trace to a lender who issued a pre-approval without reviewing the certificate of eligibility or the file. Ask who the lender is and how the buyer was vetted.
What is the VA funding fee and who pays it?
It is a one-time fee the buyer typically finances into the loan, currently 2.15 percent for first use with nothing down and 3.30 percent for subsequent use. Veterans receiving VA disability compensation are exempt. If the seller agrees to pay it for the buyer, that does count toward the 4 percent concession cap.
Have a VA question mid-deal?
Call or text Dan. Listing agents get straight answers whether or not his buyer is in the deal. That is the point.