PCS Q&A: Tips for Military Home Buyers
by Lizann Lightfoot - August 19th, 2022
This interview with Jamel Williams, a real estate agent who works with military families. This blog has been updated for 2022. You can find the original webinar and interview here.
DoD Updates: If you have your official orders in hand, go onto DPS and enter the details for your move so they can plan it, even if you are planning to do a personally procured move (PPM, formerly a DITY move).
If you are doing a full military move, you should have a moving window and transportation service provider (TSP) assigned to you. Within three days, your TSP should be contacting you to discuss your pick-up date and to get that pickup date in writing.
Let’s discuss the timing of buying a house. How far in advance should a military home buyer contact a real estate agent?
I recommend they contact the agent about three months out to assess the market, discuss their preferences, and start going through the process. Of course, every situation is different, but three months out from their PCS orders is a good rule. If you are anticipating orders, you can still contact someone a few months in advance and start learning about the area and researching homes. The PCSgrades Area Guides give you good insight into an area before you move.
Pro tip: Find a military-friendly real estate agent near your next location. Not all real estate agents know about the challenges of a military PCS, nor the loan programs for which military families qualify. Click here to get connected with an experienced military-friendly real estate agent in your area.
For first-time military home buyers, what should they look for in a good real estate agent? What question should they ask?
The first thing a buyer should ask is, “Is this real estate agent part of a relocation team?” This type of agent specializes in veterans moving to a new installation and understands the dynamics of military moves. There are numerous benefits and awards associated with that program.
Next, they should ask whether that agent can tell you how to start and what to expect from the home-buying process? Ask about closing costs and the financial aspects of buying a home. Sometimes people get off track because they don’t know what to expect, but a good agent can explain the process and how the pandemic has changed things.
Before you start looking for homes, you should connect with a lender who works regularly with military families. This lender can help you get pre-approved for a loan and tell you about available loan programs, including VA loans. Find a military-friendly mortgage lender here.
How can you back out if an agent doesn’t seem like a good fit?
You won't always hit it off with your assigned real estate agent, and that's okay. If you are part of a military real estate agent network, you can just be assigned another agent in the same network. These agencies believe in quality and satisfaction, so they want to help the buyer. The agency will work with you to help you find the perfect agent for your real estate needs, meaning you won't have to worry about finding another one on your own.
Being part of a real estate agent network is really important. If you aren’t part of a network, you are beholden to the state's contracts rules and the local guidelines. In some cases, if you aren't part of a network, you might not be able to switch agents if you have already signed a contract with your real estate agent. Most agents want to listen to the client and learn their expectations, so they can give them what they want.
How far before a move-in or report date should a family be signing paperwork to buy a house?
There are two options for buying and closing on a home: you can do it virtually, or wait until you arrive in the local area.
We often use the virtual option to show the buyer the home and do all the paperwork, which takes about 30-45 days. So a buyer should expect that it will take about a month after their offer is accepted before they can sign and accept a home.
That said, if you know your date of arrival, it's best to put in an offer at least 45 days before you will be arriving. If the seller accepts your offer within 30 days of your arrival, you can expect that you will be in temporary housing for longer than you might like.
What happens when the date on your orders changes?
If you are part of a network, you can be put on a hold status so that you can terminate a contract, be put on hold, and then restart the process when you know again when you will be moving to the area. It will still take about 30-45 days to complete the sale.
Currently, the seller’s market is hot and there is limited inventory. By the time you find a home, the listing is under contract. In those markets, looking months in advance isn’t helpful. So what advice can you offer to a family doing research three months out?
That happens every day here: we get a new buyer looking at the area, and they want to know their options. If they do virtual sales, they can do tours online and begin the process from afar. I prefer that, if possible, they wait until they arrive in the local area. Then not only can buyers see exactly how places look, but they can also move on a property the same day it goes up on the market.
This throws a huge wrench in the plans of military families trying to plan and purchase a home before their move to do a door-to-door move. With houses going so fast, families may spend several weeks looking at houses, making offers, and then having those offers rejected.
If possible, it's worthwhile to do a house-hunting trip about a month or two before your PCS move. That way, even if you do not get an offer accepted during the trip, you will at least have a firm understanding of where you want to live. That can help the process go much more smoothly once you arrive in town.
Are virtual tours becoming more standard and accepted?
Even before the pandemic, virtual tours were increasingly popular. But the pandemic really caused these virtual home tours to become commonplace. For military families, this increase in virtual tours makes buying a home from afar much easier.
The virtual tours are not much of an issue, and many buyers are requesting it right off the bat. I do virtual tours almost every day! About 90% of my contracts are virtual tours where the client has not even physically visited the home.
A lot of agents put a home on the market with virtual tours available on the listing. It doesn’t have a voiceover, but it would be helpful to let the buyers know more about the layout and house flow, so they can quickly understand where things are located in the home.
What can you tell us about the VA loan for the military home buyer?
The VA loan allows qualified buyers to purchase a home with zero down. But you still have to pay closing costs. They have rolled the funding fee into the loan, but not the closing costs. This includes the mandatory appraisal, credit report, home inspection, and termite inspection (in some parts of the country). In a buyer’s market, the seller often paid those closing costs. But right now, we are in a super seller’s market, so the buyers should expect to pay those closing costs. So even with no money down, buyers should still expect to pay about 5% of the home value in closing costs.
A home appraisal is still mandatory with the VA loan to appraise the home’s value. Since the pandemic, the appraiser has the option not to go into the home if it is occupied. Note that the appraisal is different from the home inspection, which is an in-depth look at the home’s condition.
Military home buyers who use a VA loan cannot waive inspections. However, buyers paying cash or those using conventional loans can waive inspections, making their offers more attractive to sellers. How can military families stay competitive?
This is why some sellers are reluctant to take the VA loan. My advice is to find the right real estate agent and use creative ideas to ensure that your VA loan can still be useful. It's also important to educate sellers and other agents so it won’t be counted against you.
The VA loan still has great benefits. Usually, they are all but guaranteed to close. They are sometimes shorter in closing time than other loans, so that means a faster process. Lenders want to work with and approve VA loans, so sellers are leaving a lot on the table if they don’t consider an offer with a VA loan.