In many ways, Aaron Ivey’s search for a home in Denver’s hot metro is no different than anyone else’s. Ivey, along with his wife, have paraded through 40 to 50 homes in just a few months.
“Last weekend, we looked at eight homes together total and we put in five offers,” he says.
As many frustrated homebuyers will attest, the problem in Denver is a decent home is in short supply, can garner a dozen offers and competition is fierce. We asked for stories about the uphill battle that finding a home in Denver has become and Ivey pointed out he is running into additional hurdle. It’s taking extra-long to find a home, at least in part, because the nine-year Navy vet is using a VA loan, a special low-cost mortgage available to service members.
Military vets have access to one of the best home loan products available: little or no down payment and the best interest rates — yet some seller’s agents will put the VA loan offer on a house near the bottom of the pile. It’s because they believe the buyer is less qualified, since there’s little to no money down, or that the VA bureaucracy is too onerous.
At one point, Ivey did get really close on one house.
“We were at a pizza spot, grabbing a beer and some pizza, we knew we were going to get it, we were checking out the area,” he says. “And then our realtor calls us, and he says, ‘A cash offer came in an hour before the deadline.’ So that was pretty heartbreaking.”
Cash offers don’t have as many restrictions as a VA loan, and sometimes seller’s agents will encourage a buyer to not even put in the VA loan offer because it won’t qualify. Anthony Rael, a longtime RE/Max real estate agent in the Denver area, says it happens a lot “and it’s been a source of frustration for me for many, many years.”
Rael isn’t Ivey’s agent, but when he does represent VA buyers he’ll try to explain to the seller’s agents that these loans are no different than a conventional loan these days.
“Just like these vets have gone to battle for us, you kind of have to put on your boots and strap ‘em on and say, ‘Look, I’m going to go fight for you, and people in the marketplace may view you and your VA loan and you as a buyer as something less than competitive, I don’t feel that way, and I’m going to advocate for you.’”
In his 14 years as an agent he’s never had a VA loan buyer back out of a deal at the last minute. On the other hand, he says even cash offers will weasel out of a closing sometimes.
Over the last five years, 5 percent of all mortgages in the metro have been financed with VA loans, according to data from REcolorado. Census data shows that 7.4 percent of the metro population is made up of veterans. So either some don’t know about the loans, or they’re aware that there’s a bias against VA loan offers.
“Yeah, I really don’t think there should be,” says Matthew Schulz, both a mortgage broker in Greenwood Village and himself a Navy veteran. “First of all, we’re dealing with veterans, if there’s somebody who really is out there deserving, I mean no greater folk than our military folk.”
The bad rap VA loans get is probably rooted in past experiences, he says. For one thing, appraisals used to take longer, and were more onerous. “20 years ago things were different, there were different appraisal standards, VA has lightened those standards as well.”
Now, Schulz says, it doesn’t take any longer to get a VA loan appraisal than for any other kind of home mortgage.
Aaron Ivey and his wife Brianna Fetters wish there were some kind of program to connect VA buyers with sellers interested in working with veterans — much like the programs meant to help veterans find employment.
Still, despite the challenges, they are close to closing on a property in Denver. “As soon as we close on a house we get our weekends back,” Fetters says. “Which will be so great, we actually get to go to the mountains or go hang out with our friends. But now, all of our time is spent looking at homes.”
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