Every other Wednesday, the Veterans Administration gives Washington-area real estate brokers a list of houses it has for sale. Acquired through veteran defaults on VA-quaranteed mortgages, the houses can be acquired with little cash down. The average sales price last year was $55,000.
By putting the properties up for sale at market value, the agency recoups some of its losses, but there are also some advantages for buyers. The program is open to everyone who can qualify financially, not just to veterans.
"The big advantage is that we allow the people who may have the income but may not have established enough cash in reserve to purchase the property under other programs or even conventional ways," said Julius Williams, chief of VA's Washington regional property management section.
The advantage to the consumer includes a fixed interest rate on the mortgage, currently 15 1/2 percent and a low down payment, usually below $1,500. The buyer saves money because the VA performs the loan processing and legal services for free. The only closing costs to the purchaser are appropriate taxes and homeowner's insurance, according to Williams.
Although the VA does inspect the properties, all houses are sold "as is," with the VA not liable for any needed repairs. However, 70 percent of the houses sold under the program are habitable at time of purchase, according to Williams. The VA is required under the Freedom of Information Act to provide the buyer with a complete history of the house.
"We encourage the purchaser . . . to inspect all properties to determine the condition," Williams said.
The VA currently has an inventory of close to 200 properties in the metropolitan area, with 55 listed for sale. Williams estimated that 35 percent are located in the District, 55 percent in the Maryland suburbs and the remainder in Northern Virginia.
When a house is first listed, interested parties have five working days to make an offer to the VA. At the close of that period, "we determine which offer is in the best interest of the VA," said Williams. The best offer, he explained, would be all cash, followed by one that exceeds the asking price by at least 3 percent. The VA then considers offers that increase the down payment. If any bids are still equal at that point, the income levels of the prospective purchasers are looked at to choose the most qualified buyer.
The VA accepts no offers below the asking price. Once a bid is accepted, the VA determines if the buyer is qualified financially to purchase the property.
In the past year, the VA has sold more than 125 properties in the Washington area, at prices ranging from $15,000 to $130,000, with the average approximately $55,000. More than 70 percent of the sales were to people who intended to live in the houses, Williams said. Investors who do not plan to live in the homes must make a 10 percent down payment unless major repairs are needed, in which case the down payment can be negotiated, VA officials said.
"The program is a worthwhile service," said Fred Davis of Weller-Davis Inc., a real estate company in the District and one of the area's designated VA property managers responsible for various duties, including inspecting the VA houses.
The program helps "people get into their first home when otherwise they wouldn't be able to afford a house," he said.
"With housing prices the way they are, it was beyond my consideration that I could have purchased a house," said Vivian Boseman, a single parent who recently bought a VA house. But Boseman, who said she earns an average salary working for the federal government, said the VA program made buying a house affordable.
Williams said new properties are constantly being acquired and urged interested buyers to contact any real estate broker in the area. All licensed brokers are eligible to participate in the program and receive a 5 percent commission for selling a VA house. Further information can be obtained from the VA's Property Management section at 275-1325.