The COVID-19 pandemic has severely impacted nearly every aspect of modern life and business, including the local real estate market, favoring sellers and creating fierce competition between buyers and renters.
Over the past year and a half, there has been a shortage of homes for sale, especially in the entry to mid-market price range. Homes that hit the market in decent condition sold quickly for more than the asking price. Cash buyers have come to southeastern Connecticut for the coveted coastline.
Homeowners who sold their homes in the past year took advantage of the market, typically selling for well above the asking price. But they also faced challenges. As buyers, they were on opposite sides of the negotiating table, looking for homes to buy or rent in a highly competitive market with little inventory to choose from.
That was the predicament of Stacey Parent. A few years ago she sold her Preston house. It took her a day to get multiple offers on the market. The parent wanted to make a small new home for herself and her two school-aged daughters. Her wish list wasn’t fancy or extravagant: she didn’t just want her three bedrooms and garage, she wanted to stay in Preston if she could, and keep her daughters at school and at home. I didn’t want to be separated from our friendship. She preferred a neighborhood setting where children could make friends and adults could get to know each other.
As a buyer, her parents did some things in her favor. She is employed as Pratt & Whitney’s Senior Ethics and Compliance Officer. Additionally, she had a mid-market budget of about $250,000 to her $600,000 in New London County.
Parents also came to the table with VA loan guarantees. She served in the United States Air Force for eight years.
Dispelling Myths About VA Loans
In 1944, the U.S. Congress voted in favor of a home loan guarantee program administered by the Veterans Administration. Since then, the VA has backed more than 25 million of her VA loans, according to the Congressional Budget Office.
A Veterans Loan is a lifetime benefit provided to active duty military and veterans that guarantees a fair and favorable mortgage interest rate and a loan that requires no down payment. The CBO reports that fiscal year 2020 was a record year for his VA loans, with his 12% of all single-family home loans that year being VA loans.
From a seller’s perspective, especially in a market of choosing the best home among multiple offers, a buyer taking out a VA loan is a relatively ‘safe bet’. According to the Department of Veterans Affairs, 8 out of 10 VA loans are closed (if the applicant applied within the last 90 days).
CBO also examined default rates comparing VA and FHA loans in 2004, 2010 and 2012. In each of these years, VA loan default rates were lower.
However, misconceptions about VA loans are common among real estate community and service members.
The Navy Federal Credit Union surveyed 1,000 active duty and veterans for its Veterans Loans Spotlight Report (May 2022). The survey revealed that many respondents misunderstood how veterans loans work, who is eligible, and the interest rates that apply to applicants. up to or amount of down payment required.
The survey found that 59% of active duty and 41% of veterans believe veterans loans take longer to process. 58% of active duty and 40% of veterans believe their VA loans will be delayed due to all the paperwork involved.
According to Jessye Jordan, Corporate Communications Specialist III at the Vienna-based Naval Federal Credit Union, “One of the myths I’ve heard from the real estate community is that VA loans take longer to approve than traditional loans. Va. “I don’t see a big difference in the data. In both cases, it usually takes about 35 days from contract to closing. There is also the idea that more paperwork is required, but With the exception of the borrower’s proof of eligibility, the documentation is basically the same for VA loans and traditional mortgages.”
navigate the market
After selling the Preston house, Stacey Parent started her search by signing with a Realtor and getting approval for a VA loan through Flagster Bank. She found several homes, including one she really wanted, and made some serious bids, but she lost out to other buyers.
She began to feel “buyer fatigue”. This was brought about by the heartbreak of the cycle of looking for a house, finding a house, bidding, and watching it pass to someone else. Instead, she’s determined to be rented by countless buyers.
Parents also found renting to be the best option. A friend of hers introduced her to her landlord and rented her house for her $1,500 a month. She felt it was a bargain compared to other homes she had seen for over $2,000. As her lease neared expiry, she stepped onto the market again, signing with a new real estate agent, Sarah Vegliante, broker-owner of her Realty, Saraz of Preston.
The market remained highly competitive. The homes were being sold for well above the listing. They sold in record time, and buyers had to be agile and ready to “make the biggest decision of their lives” within hours.
“Cash buyers were coming out of the woodwork,” the parent recalled.
She bid on and lost four homes before finding one — and even had a suitable home that ticked her most important boxes: a three-bedroom Preston part of the neighborhood, a garage. . The division level colony she was built in 1974. Located on 0.73 acres across from Lake Amos.
The property was listed for $289,000 on May 5, and the parent purchased it for $323,000 on June 21.
It wasn’t pristine. That was one concession the parent realized had to be made based on market conditions. was sold at a price.
Over time, she’ll work on fixing leaks and reducing mold in her poorly ventilated garage.
“That’s the nature of the market today. You have to settle,” she said.
As with the other offers she made on the house, the parents had to come up high with their bids.
“I think it’s really bad that we can’t even take advantage of that benefit,” she said.
“Some people were abstaining from testing as opposed to VA loans where you can’t do it.
“This house ended up being perfect. It needed work, but the layout itself and the space is what I wanted, and it’s right across from the lake,” she said.
She believes it’s a good investment too.
“In the old days, when I bought a house, my grandfather would always say, ‘Location, location, location! says Mr. “It’s just the market. But even with the location I got, the neighborhood I got, and the amount of work I had to do to put the money in, it’s definitely a good investment.