Las Vegas Property Management: 3 Steps to a Successful Rental Income

Rents are up, and property values are down, making Las Vegas a great place to get established as a property owner. Of course, buying a rental home and actual getting it occupied and generating income are separated by a few crucial steps. All told, however, it’s easier than you think to start earning rental income.

Research and Buy Strategically

If you’re buying a rental property, you’ll need to lead with your head, not your heart. Start with the numbers, not the upgrades. You’ll need to get a solid idea of how much properties are renting for in various areas of Las Vegas. Then, you’ll want to get an idea of how much you can expect to pay on a mortgage in a particular price range. Start your search where the line between rent and mortgage cross.

If you buy too much property you won’t see a profit from the rental income, since it’s generally capped by the rental market of an area. If you buy a property that is ideally suited for an area and happens to be selling for far less than you can earn in rent, you’ll have a much higher profit margin. These numbers can be hard to find, but working with an experienced realtor or property manager can give you insight into the various neighborhoods and rent amounts to expect.

Make Ready

Ideally, the home you buy should be ready for tenants immediately after signing the mortgage paperwork, but this is rarely the case, especially when buying foreclosures and bank owned properties. Have a contractor on hand immediately after closing and a list ready to go from the inspection you had during the buying process. The faster you get the home ready to rent, the more quickly you can expect to see a profit.

If a home will take massive amounts of work to make ready, it will take a long time to recoup the costs of the repairs and renovations – this is something to keep in mind during the buying process. A rental home in the average market doesn’t need many bells and whistles.  A clean, fresh home with functioning appliances is your goal with the make ready, not a beautiful home to entice a reluctant buyer.

Find Renters

An empty rental home diminishes income rapidly. Your property manager who helped you locate the home can also help you rent in. The manager will handle the screening of tenants as well as showing the property to those interested in renting. He’ll do the necessary interviews, handle deposits and payments and forward you the rental income once the renters are established.

While it’s important to have a nice property to keep your renters comfortable and content paying you monthly for the privilege of living in your property, you also need an outstanding property management company.

Your tenants should have their concerns addressed quickly and any issues with the home or rent payments need to be handled professionally and promptly. A poor choice in management for your properties can run your tenants out, resulting in lost income while you find new tenants at the end of each lease agreement.  Learn more about what Shelter Realty can do to help you manage your properties by giving us a call at 702.376.7379 or visit the property management section on our website.

We’re excited to announce a new addition to our Property Management team, Las Vegas Property Manager, Melody Wallace.

Melody, a former Corporate Broker with Asset Realty has over 13 years of residential property management experience here in the Las Vegas Valley.  She brings a vast amount of knowledge to our team and will be instrumental in the growth and development of our property management division.

Melody not only takes the position of property manager but takes on the responsibility as our new office manager.  She will provide training and guidance to our staff and will continue our commitment to exemplary customer service.  I know we are lucky to have her and I am confident our landlords and tenant will enjoy working with her.

If you get a moment, please welcome Melody to the Shelter Realty family.

Important Announcement – If you are considering securing FHA 3.5% down financing for a home in Clark County (Las Vegas, Henderson, North Las Vegas, Boulder City), you have until October 1, 2011 fund on your loan before the loan limits drop from $400,000 to $271,050.

What this basically means is that the alternative to FHA Mortgage Loans is finding a Conventional Mortgage, which may require a much larger down payment (up to 20%), as well as higher credit scores and income requirements.

Quick Background:

When Congress passed the Economic Stimulus Act in 2008, FHA loan limits were temporarily raised to help borrowers in higher cost areas obtain financing through FHA to help offset the reduction in private financing due to the credit crunch. These Loan Limit increases were substantial in many areas of the country and were set to expire in the future. ( I wonder if Congress knew we’d have a housing bubble )

Congress passed additional legislation to extend these loan limits for the past couple of years. However, barring any Congressional action, the FHA Loan Limits are set to revert to the 2008 formula as of October 1, 2011.

Clark County FHA Loan Limits / Proposed Changes:

* Sources: Search FHA Loan Limits | May 26, 2011 – FHA Loan Limit Brief

How Will This Impact Buyers?

A few of the major benefits of an FHA Mortgage Programs:

• Liberal Credit Requirements (580-640 Fico Scores May Work)
• Lower Rates (Not hit with rate increases due to lower FICO scores – LLPA)
• 3.5% Downpayment

While there is mortgage money available… for now, Section 941 of the Dodd-Frank Act pertaining to risk retention and the Act’s definition of qualified residential mortgages (QRMs) could make it very challenging for many First-Time Home Buyers to get a loan. (Video: “Skin In The Game)

However, the difference in downpayment and higher rates may actually force the sellers who have their properties listed in the low $300,000 range to drop their prices just to compete for the FHA borrowers.

Not sure, but this theory makes sense to me, especially if we’re talking about Las Vegas Short Sales and REO’s where the banks will need to price their listings according to accurate market comps.

Buy now, or wait for the FHA loan limits to decrease, along with property values?

Tough question to answer if you’re only concerned with value, equity and other “investment” related topics that probably shouldn’t be mixed with the decision to purchase a primary residence.

And if you’re a cash investor, then this FHA loan limit decision probably won’t impact the homes in your price range of Las Vegas real estate investment deals under $145,000.

Keep in mind that 51% of residential properties purchased in Clark County last month were paid for in cash, and not secured by a mortgage loan.

Either way, the following map and list of homes for sale in Las Vegas and Henderson may give you an idea of what you could miss out on once the FHA Loan Limits in Clark County decrease.

The two main questions to ask yourself area whether you would rather pay 3.5% or 20% down, and if you’re willing to risk getting a higher rate by waiting until after October 1 to see what the market does.

* This list updates every day from the “ACTIVE” listings in the MLS. Once a property goes into contract or “Pending” status, it is automatically removed from this list.

Even the wealthy are considering strategic defaults on their million dollar mansions in Las Vegas.

As reported by Bloomberg.com:

April 26 (Bloomberg) — Nicolas Cage, the Oscar-winning star of “Leaving Las Vegas,” bought a seven-bedroom home with a panoramic view of the city’s casino-lined Strip in 2006 for $8.5 million. By January 2010, it was in foreclosure.

The next owner, who property records show paid $4.2 million, has put the house on the market for $7.9 million — an “unrealistic” price, according to Zar Zanganeh, the broker handling the listing.

On a side note – While many homeowners of high end Las Vegas homes may consider foreclosure as a strategic business decision when they’re upside down by several million dollars between what they owe the bank and what the property will sell for, Shelter Realty has been successful in negotiating short sale transactions on jumbo loans upwards of $1.5million.

And, if you’re considering purchasing a million dollar mansion, we have mortgage companies that are able to finance Jumbo loans in Las Vegas with as little as 25% – 30% down, depending on the purchase price, loan amount, and all other basic Mortgage 101 Qualifying Guidelines.

Las Vegas has made several top 10 real estate and economy lists in the past few years, yet this is the first positive mention of our local market that I’ve seen in a while.

CNNMoney.com named Las Vegas as one of the 10 best cities for homebuyers due to the high occupancy rates of rentals, low cost of housing and popularity by cash investors.

Don’t worry, this is not just another post from a REALTOR on a real estate site about why it’s a good time to buy a home.

Actually, our Las Vegas investors and property management clients have known about the cash flow rental income opportunities in Las Vegas for a while.

And, most of our VA Loan Eligible buyers are already out looking at homes that are 60% – 80% less than the properties they lost to foreclosure as little as two years ago.

Home builders have also started scooping up vacant land at around a 50% discount from what they were paying per acre during the boom years.

However, the flip side to the “Buy Now” debate has some great points as well, especially since the Dodd-Frank mortgage reform bill may potentially hurt real estate values due to the tough qualifying requirements being imposed on lenders and first-time home buyers.

Either way, it’s nice to be mentioned on a positive real estate list for a change.

If you’re one of the lucky ones out there with a steady job, a nice cushion in savings and an opportunity to buy a new home, you’re shopping in the best house-buying environment available.

In many areas where the prices were exorbitantly high, they are now reasonable and have been for some time.

In areas where prices only rose marginally, the prices are back down and with a huge surplus of homes still on the market, you can essentially have your choice of house when you’re shopping.

Some of the main differences between the best bargains on Las Vegas real estate depends on whether you’re purchasing an existing resell property, short sale, recent foreclosure (bank owned) or new construction. And, the actual home buying process between each of these types of purchase transactions varies as well.

There are definitely pros and cons between resell vs new construction, but I’ll cover a few of the top money saving tips in this article for either option you choose.

New Construction

There are still homes available that are being built from the ground up. In fact, you can walk into a builder’s office today and start the process of building your own home and likely walk out with a nice incentive or two. The builders have been hit substantially in the past few years and homes aren’t selling quickly. This means the builders are likely to try and draw you in with huge savings, freebies and specials. While absolutely enticing, these new construction homes might not be your best choice in the long run.

If a builder is offering $10,000 in free upgrades, for example, that’s enough to put in hardwood flooring and maybe buy a refrigerator depending on the quality of the floors and the size of your house. Yet even with beautiful floors and a shiny new refrigerator, you’re still looking at the costs of moving in, fixing things up and dealing with blank walls, empty rooms and absolutely no special touches. Those costs can’t often be fixed by dealer’s incentive and while you don’t have repairs to make with an older home, it doesn’t have any distinguishing characteristics either – it’s one plain white room after another – and that costs money to improve and make your own.

Existing Homes

Many argue that you’ll find the best deals in existing homes, and it’s easy to see their point. Sellers are anxious to move their existing homes. Even if the market is starting to stabilize, homes may still be sitting on the market for months holding up plans of the seller, making them almost desperate to sell. Almost all existing homes come with negotiable prices, but some are more negotiable than others. While most of the real estate market has fallen and is still considered sluggish, the most desirable neighborhoods saw only a bit of a slowdown.

If you’re hoping to pick up a foreclosure for pennies on the dollar, or grab up a hot bargain after an intense negotiation process, you’ll likely be looking in an area slightly away from the best neighborhoods. It’s not just the least desirable neighborhoods that have foreclosures and houses sitting on the market ripe for negotiation, but the closer you get to the best school districts or the center of the city’s lifestyle, the more you can expect prices to rise and stay there.

Of course there is added benefits to buying an existing home, even if you didn’t get a hugely discounted purchase price. The sellers of existing homes know that competition is fierce, and even if they aren’t willing to negotiate much on price, they are willing to work with you on other things, in many cases. You may be able to have the seller fix any and all problems with the home. You may be gaining a swimming pool, deck and hardwood floors as part of the price. The walls may already be painted a neutral color and any upgrades made to the house stay there, in most cases.

Getting the Most Bang for Your Buck

The best way to determine the true price of a new home is to make a list of all of the things you’ll be expected to buy as part of the deal. If you’re getting a new construction home, plan on the window treatments, wall paint and every upgrade you’ll need to make it feel like home.

If you’re considering an existing home, factor in the cost of repairs and additional benefits you may be getting that you’d otherwise have to pay for in the new construction. Buying a new home is intensely personal, but while picking out what suits you best, take your time and work the numbers – this is a great time to get an outstanding bargain.

As of April 2, 2011, there are a few single family homes for sale under $100,000 in the Lone Mountain area of Las Vegas, NV.

Notable for the beautiful desert mountain range that can be seen just under the glowing evening sunsets, multiple neighborhood parks and walking trails, the Lone Mountain housing community is an excellent area for Las Vegas First-Time Home Buyers or Investors to check out for affordable housing.

I have lived in NW Las Vegas for the past 7 years, and I love the quiet natural landscape, wildlife and small town feel.

With the 215 / Summerlin Parkway and the 95 freeways within a 5-10 drive from the base of the mountains, the Lone Mountain area is still a convenient drive to other parts of Las Vegas.

Most of the single family residences for sale in the 89129 zip code under $100,000 are fairly new properties (5-10 years old), and range from 1300 – 1700 SQ FT.

While most of the homes in that lower price range have smaller lots, mainly due to the mini housing boom between 2003-2006, it is not uncommon to find great property deals that have upgraded cabinets, granite and other amenities.

Some of these properties were selling for over $300,000 during the height of the market.

And, if you push your purchase price level to just under $150,000, there are some amazing homes available.

Below, I’ve listed a few related property searches, a list of all the local businesses, an updated feed of homes under $100,000, a graph to show how prices have dropped over the past few years, as well as a photo slideshow of a hiker who climbed Lone Mountain with his pet duck.

Our new Las Vegas landlord property management clients are generally overwhelmed at the amount of effort and detail that goes into preparing a rental property for new tenants.

Simply cleaning up a property so that is shows well at listing appointments is only part of process.

However, turning a rental into a home that a tenant can live in requires a lot of extra steps that most new landlords haven’t considered.

While most seasoned real estate investors may have perfected their own “Rent Ready” systems, the following 12 steps are the basics that all landlords should pay attention to:

1. Locks Re-Keyed –

The front door and garage entry are two obvious locks to change.

However, you’d be amazed at how many landlord forget all of the other locks that are tied to a property, such as – mailboxes, side gate, garage door openers re-programmed, house alarm code changed, outdoor sheds…

It’s also a good idea to make sure you have a complete inventory of any HOA gate remotes and keys, community pool or fitness center, as well as any special gate codes.

2. Professional Carpet Cleaning –

We recommend the type of carpet cleaning that doesn’t leave any residue. So, a full steam cleaning and “shampoo” would be better than a chemical / solution overlay.

Las Vegas carpet cleaning costs can range from $99 – $400 for a 1500 – 2800 SQ FT property.

3. Landscaping –

Cut the grass, trim the bushes, prune the trees, pull all of the weeds, fix the broken sprinkler heads, replace dead or dying shrubbery, add a few new flowering plants if the season is right and spray the dirt out of the cracks in the sidewalks and patio.

Rent Ready landscaping also involves removing any pots, yard furniture or decorative garden gnomes.

4. Changing The Air Filters –

In addition to changing the air filters, cleaning the vents and surrounding ceiling area goes a long way to impress a potential tenant.

I’m not talking about a full air duct cleaning, which wouldn’t be a bad idea, I’m simply referring to the visible area where the dust and dirt builds up.

And, if you have the reusable air filters that have to be manually cleaned every month, take them home with you and trade them out for a fresh new disposable option.

5. Professional Rent Ready Cleaning –

Even if you or your past tenants happen to be extremely clean, a professional crew will probably still be necessary in order to give your rental property that industrial strength detail that your new tenants will expect.

The rent ready cleaning companies that we work with in Las Vegas literally go over every square inch of the property cleaning drawers, cabinets, baseboards, blinds, door arches, lite switch covers, the scuff marks at the bottoms of doors, and the insides of your fridge, washer and dryer.

6. Let There Be Light –

It isn’t necessary to change out all of the light bulbs, but you could change a few to a different wattage or replace with an energy saving alternative to conserve power.

Also, simply replacing bulbs may not be enough if the light covers of outside lamps or inside ceiling fans are so dirty that they only produce a dim glow.

7. Ceiling Fans –

Major dust collectors that definitely require special attention, especially if they have been installed in a property for a few years.

8. Outside Cobwebs –

At least clean up the spiderwebs that are hanging over the entryway or covering the front lights on either side of the garage.

9. Window And Sliding Door Tracks –

It only takes a few months with the Las Vegas wind for dust, dirt and dead bugs to build up inside of the window or sliding glass door tracks.

This is an important Rent Ready step that Shelter Realty requires for the rental properties that we’re managing.

10. Remove All Personal Items –

This includes lawn furniture, yard tools, couches, cleaning equipment, chemicals…..

The only exception would be a small sample of paint that matches the inside and outside walls. A few pieces of tile are acceptable as well, but that’s about it.

If the new tenant happens to see some old items that they wanted, then it would probably be acceptable to include them in the original lease agreement with terms of ownership.

11. Replace Torn Screens –

Torn or bent screens and screen doors need to be replaced. If you have a large house with minor wear and tear on these items, then it’s probably a decision you’ll have to consult with your property manager about.

12. Pest Spray –

It’s better to have the property sprayed a few times, or set up on a regular schedule. Either way, you’ll definitely want to hire a professional pest company to give your property a full treatment for all of the common bugs in the Las Vegas Valley.

Based on just these 12 steps alone, getting a Las Vegas rental property ready for new tenants or the initial listing / marketing is a big process.

Please feel free to contact our Las Vegas property management division at Shelter Realty if you have specific questions what services our company and vendors handle for new landlord clients.

Five Ways Landlords Can Protect Their Vacant Las Vegas Rental Properties

As a former police officer for the city of Henderson, I have a unique perspective on crime involving vacant properties.

Patrolling neighborhoods at all hours of day and night has helped give me an eye for possible break-in opportunities that burglars and vandals would take advantage of.

Now, as a property manager with hundreds of rental properties, I’m able to lean on my law enforcement experience to help our landlords and out-of-state investors protect their vacant homes during the transition period of when Shelter Realty takes over management of their properties.

Here are five things we recommend to landlords for keeping their vacant Las Vegas rental properties safer:

1. Remove “For Rent” Signs From Windows And Yard –

The first, and one of the most important things we ask our property management clients to do is remove any rental advertising on vacant properties.

Even worse than a “For Rent” sign in the window of a vacant property, is if it states that the owner has installed a new Fridge, Washer, Dryer and Upgraded Light Fixtures.

2. Maintain The Landscaping –

Weeds, broken sprinklers and dead grass are signs that a property may be vacant or even abandoned.

Obviously, a maintained yard will also give a potential renter the warm and fuzzies, as well as keep the neighbors happy.

If you hire a landscaping company to handle your weekly outside chores, make sure you ask them to collect any flyers or door hangers from your entryway that may look like trash.

3. Put Lights On A Timer –

A porch light that is on 24 hours a day is almost as noticeable as one that is off at night.

In addition to keeping your outside lights on a regular schedule, it may be a good idea to put an interior light on in the upstairs or within the center of the home to give the perception that there is someone living in the house.

4. Blinds Open Or Shut –

We can make an argument for either keeping the blinds open or closed. With that said, our recommendation is to keep the upstairs open and the downstairs closed.

It also really depends on whether or not you have neighbors that are willing to keep an eye on your property for you.

If the blinds are open, then it’s easy to see when someone is inside, especially if you drive by the property one day and notice that some of the blinds have been shut.

However, having open blinds also allows anyone to look in the windows and see that the property is vacant.

Basically, use your best judgement on this topic, but it is something to be aware of and strategically plan for.

5. Qualifying Interested Callers –

If you are marketing your property in the newspaper or online, be cautious of what information you give callers who may be interested.

For example, it would be a bad idea to give away your address to someone who wanted to swing by and take a look at it after work… if you also told them that you live out of town and there won’t be anyone around to help them until the end of the week.

Keep in mind that you may not be the only person on the phone that is having a “pre-qualifying” conversation.

While keywords such as move-in ready, vacant, fully furnished and new appliances may appeal to potential renters, they also peak the interest of criminals.

Shelter Realty definitely understands how challenging of a balancing act it can be between giving too much information in your marketing while still protecting your investment property.

Shelter Realty is a Real Estate and Property Management Company specializing in the areas of Henderson, Las Vegas and North Las Vegas, NV. Feel free to give us a call at 702.376.7379 so we can answer any questions you may have.

A VA loan is often a better option than a convention mortgage for veteran and active duty military home buyers who are interested in purchasing a Las Vegas home.

With Nellis Air Force Base located near North Las Vegas, we have several VA eligible first-time homebuyers contacting Shelter Realty about taking advantage of the historically low housing prices in the valley.

Unfortunately, the national media has many buyers convinced that the only way they can qualify for a home loan is if they have perfect credit and a huge downpayment.

Over the next several weeks, I’ll be tearing apart the common myths and misunderstandings about mortgage financing in order to help shed some light on the truth about getting approved for Las Vegas mortgage.

Even though each qualifying scenario is unique and requires a full loan approval from a mortgage professional who has experience with VA financing, the following list highlights the main benefits VA loans have over conventional mortgage programs:

1.  100% Financing –

A typical convention mortgage requires an initial down payment that can range from 5% – 20% of the appraised value on a purchase.

I say “appraised value” vs “purchase price” because there are instances when a property does not appraise for the full value of a homeowner’s asking price.  At that point, the borrower would have to pay the difference between the asking price and appraised value, as well as the standard 5% – 20% down payment.

Either way, VA loans generally do not require that initial large down payment based on the standard Loan-to-Value lending guidelines that come with a conventional mortgage program.

2.  Lower Interest Rates –

Another major benefit is that VA loans have comparatively better interest rates.  In some cases, a VA loan mortgage rate can be as much as .50% lower than on a similar conventional program.

Over the course of several years, a $35 – $75 a month payment will definitely add up to a significant savings.

The process of shopping mortgage rates is the same with any program, so it’s a good idea to have a basic understanding of how the markets work if you’re concerned with comparing quotes between a few lenders.

3.  No Mortgage Insurance –

Private mortgage insurance (PMI) is generally required on conventional loans when the loan amount being borrowed is greater than 80% of the value of the property.

The Department of Veterans Affairs does have a funding fee requirement for VA loans. This funding fee can be anywhere between 0.5% to 3.3% of the loan total. However, veterans who were classified as disabled during at least 10% of their time in active duty do not have to pay the fee.

Mortgage insurance is basically in place to protect the lender in the case of payment default or foreclosure.

4.  Qualifying Guidelines –

It is also typically easier to qualify for a VA mortgage loan than a conventional mortgage, especially if you have a recent bankruptcy or foreclosure within the past four years.

There isn’t a hit to the interest rate for lower credit scores, and VA underwriters tend to give special circumstances more consideration if there is a good letter of explanation.

In addition to the benefits mentioned above, VA loans have two payment term options – Fixed or Adjustable Rate.

The difference between the two options is as follows:

• Fixed rate loans have one payment tied to the same interest rate for the entire term, which is typically 15 or 30 years.
• Adjustable rate loans start off with a set interest rate for a predetermined period of time, and then the rate may change based on the specific terms set forth on the note. Know you options, and make sure you understand which program you are choosing.

Refinancing with a VA loan also has many benefits over refinancing with a conventional loan.

Some of refinance benefits include:

• A higher refinance limit (up to 90% and some 100%) than the majority of conventional loans.
• Easier credit requirements, which often make refinancing with a VA loan simpler and less stressful.
• Help from the Department of Veterans Affairs for borrowers currently in default because of financial hardship.
• No requirement of private mortgage insurance.
• The ability to include the VA funding fee with the total amount of the refinance.

Between the tremendous savings and streamlined qualifying guidelines, any veteran who is in the  process of purchasing or refinancing a home should strongly consider using their  VA benefits.

Shelter Realty works with several qualified and experienced mortgage professionals that specialize in helping Las Vegas Veterans qualify for a VA loan.

Please feel free to contact us if you have any questions about VA approved properties or speaking with one of our trusted lenders.

Yes, it is possible to finance a luxury Las Vegas home in the beautiful Queensridge Community with as little as a 3.5% down payment, provided the purchase price is below $400,000 for FHA financing.

There is actually an opportunity to qualify with zero down financing for a slightly higher purchase price if you are eligible for a VA loan.

It’s obviously important to work with a trusted mortgage professional who understands these various local lending guidelines.

However, I find that most of my Las Vegas First-Time Home Buyers looking in the Peccole Ranch area start their real estate search for homes between $60k – $130k, when they can actually afford financing on a property in some of the more prestigious neighborhoods around the 89117 or 89145 zip codes.

While there are certainly several available listings in lower price ranges that may provide a cash flow opportunity for investors, choosing a home and neighborhood to live in involves searching with a slightly different criteria.

Queensridge, for example, is a guard-gated luxury community, which includes a full fitness center, tennis, pools, spa and is woven around the Badlands Golf Course.

With several listings in the million dollar price range, Queensridge does have a select few properties for sale that would qualify for lower down payment financing.

If you’re concerned about the investment quality or potential for future earned equity, it’s generally a wise idea to purchase a home in a neighborhood with stronger comparable values.

So, only if your personal budget and comfort level warrant it, you feel confident in your future employment security and there is a low possibility of moving in the next 5-10 years, it may be worth considering a home in the luxury Las Vegas Queensridge Community.

Since most of these listings require a scheduled appointment to preview, please feel free to contact me at any time about setting up a few viewings at your convenience @ 702-376-7379.

If your Las Vegas property is secured by a VA loan with a mortgage balance that is higher than the appraised value, and you need to sell, then you may be eligible for a special program called a VA Compromise Sale.

Basically, a VA Compromise Sale is a program similar to a short sale transaction, which is designed to help veterans sell a property with an upside down mortgage balance without taking a huge financial loss.

In any case, if you bought a home with a VA loan back when the housing market was healthy, you probably didn’t foresee the need to sell your home in the depressed housing market of today.

The need to move overseas, divorce or or a station change are a few of the reasons that would force a VA homeowner into selling a property.

Obviously, for many veteran borrowers who are facing this scenario, taking a loss on the sale of their home could result in extreme financial difficulty.

How Can A VA Compromise Sale Help Me?

If you are selling your house and receive a purchase offer for less than what you still owe on your VA loan, you can turn in an application with the Veterans Administration for a VA Compromise Sale.

In many ways, a VA Compromise Sale is similar to a short sale with another type of mortgage program.

The good news is that if you receive approval for a VA Compromise Sale, then the VA will redeem you for the difference between what you can sell your house for and what you have left on your VA loan.

To Qualify, You Must Show Proof Of:

• Financial difficulties.
• The realistic market value of your house at time of sale.
• A VA appraisal.
• Standard closing costs.
• No second lien (the VA does makes rare exceptions if the total is not significant).
• The reasons why you are selling your home.

Another important component of getting approved for a VA Compromise Sale is that the total net loss should be less than if the property was taken back by the bank through foreclosure proceedings.

So basically, if it costs more to foreclose vs “short sale” the home, then there is a greater chance of getting a VA Compromise Sale approved.

On another note, if your VA loan originated before December 31, 1989 you might have to sign a promissory note as well as enter a payment plan to redeem the VA a percentage of the compromise claim payment. This sum would end up being less than what you would owe if you did not originally have a VA loan, and the payment plan itself is formulated around what you would reasonably be able to pay.

Our Short Sale team has a proven track record of successfully negotiating with banks to help homeowners sell their properties for less than they owe on their mortgages. However, with a VA Compromise Sale, most of the negotiating process is reduced to simply filling out the proper paperwork and submitting a clean and fully completed package.

Please feel free to contact us to see if your property or unique short sale scenario might be eligible for a VA Compromise Sale.