Military Relocation to the DC Area
You’re in the military and you just got relocation orders to come to the DC Area? Congratulations! You’re not alone in this either. We are working with several clients right now moving here who are international and U.S. based. Because this is a move that you’re probably not totally in control of, it is likely pretty unnerving. We’re going to go through a list of how to manage the relocation process.
First, please reach out to us as soon as possible. The earlier you communicate with us, the better and easier we can make your move. We want to know what type of lifestyle you are seeking, where you will be stationed, what hours you will have, if there are kids in the picture to consider and any other relevant information you can share. It’s important to know that in the DC area traffic is rough. Where you choose to live will have a huge effect on your commute and quality of life in relation to where you work. There are many public transportation options though and we want to discuss those options with you and determine your comfort level with public transport prior to casting a house search. Whether you choose to wait until you are here in the area or need to buy something prior to arrival, early communication is critical.
Second, it is possible to buy a home from a distance. We have helped a lot of military folks relocate virtually. How do we do this? We had clients relocate from Algeria. Everything was conducted over WhatsApp and Facetime. They also relied on us to meet with a contractor so they could have the floors replaced prior to their arrival. All of this can be handled virtually from our initial meetings to property showings, the final walk through and the closing.
There are definite pros to buying the home virtually. You will have a place to move right into which is great and will limit having to move twice and coordinating kids, schools and storage of your personal items. And you will also have an address to begin the school enrollment process for your kids. Our clients we’re working with now are temporarily on base in Maryland. They attempted to enroll in the school system there and were met with essentially a door slammed in their face.
Third, it’s really important in this area to work with a local lender who knows the process well. It’s very competitive in the DC area and this includes the suburbs. Some listing agents already have preconceived ideas about VA loans because of the appraisal process, so we want to ensure we are putting your best foot forward on every part of the offer.
You may be wondering why we are so firm on this – it’s because the large lenders that market heavily to the military homebuyers often charge fees that aren’t mandatory. One of our local lenders here saved a client $14,000 from what they had been quoted from one of the banks which advertises their service for the military. The lender will also talk to you about the funding fee. The VA charges an upfront fee of 2% of the loan, which can be waived if you meet the criteria or partially waived.
While we’re on money, there is some good news too. Our home inspector and title company give discounts for military, so you will save money on those fees.
Fourth, if you are looking for condos, we will need to ensure that the condo association is VA approved. They aren’t always, it depends on the management company, so if condos are part of your home search, we need to plan ahead a bit.
Fifth, the appraisal process can have some hurdles. The VA appraisal process includes a list of items that must be in working order for the loan to move forward. The misconception with many listing agents is that this list is excessive and if the home has any of these required repairs the contract calls for the seller to complete and pay for them. So this is why sellers and their agents may shy away from taking a contract with a VA buyer if they also have a conventional loan offer too.
So what does this pesky appraiser want the seller to have in working condition? Nothing out of the ordinary. These are items that should be in working condition regardless of who the buyer is and what type of loan they have. Plumbing and electric must be in working order without knob and tube wiring. Heat and water must work and be supplied to the home. The roof needs to have some usable life left and not be in need of immediate repair or replacement. The home must be of quality construction and have no health/safety hazards or pests like termites. This is what we have to educate listing agents on every day because they have preconceived ideas about the VA process being difficult for sellers.
What repairs are most commonly seen? Chipping paint on both the home and sheds or outbuildings, missing handrails on stairways greater than three stairs, broken windows or window panes. Appraisal repairs are listed on the appraisal report and become mandatory repairs. Once the repairs have been completed, the appraiser will come back out to the property to confirm the repairs are completed and then the appraisal is considered complete. The buyer can choose to have the appraisal repairs paid for out of their own pocket, which we have seen on as-is properties. The MAR or Maryland state real estate contract has a section that predetermines what the seller is willing to pay in the event of appraisal repairs and then any cost beyond that becomes a negotiation.
Finally, a bit about closing costs. They vary by jurisdiction. They are highest in Maryland, typically in excess of 3%. Don’t forget that you have to add the VA funding fee to this as well, so you’re close to 5.5%. In DC it’s closer to 3% for closing costs plus the funding fee and Virginia is the lowest – typically closer to 2% plus the funding fee. They can be rolled into the loan and sometimes the seller will contribute to the closing costs.