Understanding Offers and Contracts
Veterans and active service members who are considering purchasing a home may be wondering: if I get a VA loan, can a seller not accept my offer? The fact is that until a purchase and sale agreement has been signed and the seller has agreed to a price, the seller is not obligated to accept an offer. However, if the seller has agreed to sell the home at a specific price and the VA loan is sufficient to meet that price, the seller is obligated to accept the offer.
Difference between Offer and Contract
It is important to remember that sellers may accept offers on any property they are selling until the time that they sign a purchase and sale agreement. Until a purchase and sale agreement has been signed, there is no contract between the buyer and the seller. Sellers are bound by purchase and sale agreements and may not enter into two home sale contracts at the same time.
Purchase and Sale in Place – Can the Seller Recant?
If you have a purchase and sale agreement and have just received your VA loan approval, you now can go back to the Realtor or seller of the home. At this point, you may be wondering "if I get a VA loan, can a seller not accept my offer." At this stage, you have gone past the offer stage to a purchase and sale stage. However, depending on the contingency clauses that are contained in the purchase and sale agreement, the seller may still reject your offer. Here are some of the cases where the seller may recant on the sale:
Approval amount reduced – For the buyer to be able to legally escape from the purchase and sale agreement that you signed, the amount of money must be reduced from the original sale price. If there is a contingency clause in your contract that the buyer will accept the VA approved amount, the buyer cannot reject the offer;
Repairs and upgrades – When a VA loan approval is completed, if the buyer is obligated to make excessive repairs or upgrades to the property as a condition of the loan, the buyer may be able to reject the offer. In this case, it is a good idea to speak with the Realtor as well as an attorney to find out the legalities. This may vary by state or by lender;
Appraisal discrepancies – The Veteran's Administration generally has a list of approved appraisers. In the event that the home seller has another appraisal that varies significantly from the VA appraisal, there may be cause to cancel the contract. This is another case where a discussion with the Realtor or a real estate attorney may be warranted.
The seller of a home is under no obligation to accept any offer. This is regardless of whether the offer is the highest offer, the lowest offer or anything in between. Until such time as a purchase and sale agreement is signed, the seller is under no obligation. There may be specific conditions under which a seller may cancel the purchase and sale agreement after a VA loan is approved. Home buyers who are in this position will want to speak with their VA representative, the Realtor involved in the transaction and when warranted, with a real estate attorney if needed.
- The Home Mortgage Help Source; The VA Home Loan https://www.ronkerwood.com/VALoans.html
- Veteran Loan Center – VA Loan FAQs https://www.veteranloancenter.com/va-loan-faqs.html
- Veteran's Administration – Eligibility Frequently Asked Questions https://www.benefits.va.gov/homeloans/faqelig.asp