As a Realtor, your duty is to serve your clients with the best possible insight into how to match their wish list with their budget.
When your clients are active-duty members of the military or veterans, your duty comes with an added sense of responsibility: to do the best you can for those who have given their best to protect our country.
A challenge for military families with one or both spouses on active duty is the possibility of a transfer. Yet most members of the military want to buy a home if they can, even if they must sell within a few years, says Eric Hughes, a sales associate with Berkshire Hathaway HomeServices PenFed Realty in Richmond, Va., near the Fort Lee military base.
“Many of the buyers I work with are officers who will be stationed in the area for a few years, but even those who know they will be deployed often want to buy so they know their families will be taken care of,” says Hughes. “They like the idea of buying new construction because they know newer homes are more energy efficient and will have lower utility costs.”
Hughes says retired military buyers often prefer new homes so they don’t have to spend time on home maintenance or renovations. Those buyers tend to prefer a home with a first-floor master suite, which can be difficult to find in an older home.
“The military families I work with want to buy new if they can afford it,” says Corinne Smith, a broker with Coldwell Banker Advantage in Fayetteville, N.C., near Fort Bragg. “These are savvy buyers who know all about energy-efficient windows and R-ratings. Even if they buy a resale, they want one that’s less than five years old. They especially want new to avoid maintenance for their families and in case they’re transferred and decide to rent the property.”
Smith says military buyers are very concerned about staying within their budget, so knowing that energy costs will be low and maintenance costs minimal are important incentives to this group of buyers. Those who have lived on a base are particularly concerned about the unknowns of things like utility bills that they have not had to pay in the past.
“The warranty that comes with a new home offers a lot of peace of mind to military buyers,” says David Poole, a sales associate with Berkshire Hathaway HomeServices PenFed Realty in Reston, Va., near the Pentagon and several military bases. “It’s like buying a new car and knowing you won’t have to put a lot of money into it for a long time.”
Poole says military buyers tend to be more focused on resale value than other buyers, so he advises them to make sure they’re buying a home in the mid-range of prices in a community rather than the most expensive home. Better yet, he says, buy a lower-priced home in the best community.
Time Constraints and Military Buyers
Smith says many of the military families she works with opt to have a home constructed and don’t mind waiting six months or so because they’re living on the base and can move out easily at any time. She says the ability to select options is exciting for them, particularly first-time buyers.
“Military buyers who know they’ll be transferred soon may benefit from buying a nearly ready or inventory home,” says Hughes. “They often don’t know such a thing exists and think they have to buy a resale, so it’s good to show them the opportunity to buy a new home even though they may not be able to choose all their options.”
Poole says he discusses the progress of a community with military buyers so they understand the implications if they need to sell.
“If community amenities are in place and the builder is almost done with a community, then it can be easier to estimate your resale value than if you’re among the first in a community,” he says. “It can be hard to compete against new homes that are still being built if you need to sell.”
While choosing the best options for your lifestyle and potential resale value is important for all buyers, this issue can be even more crucial for military buyers who may need to sell quickly or rent their property. Rental markets tend to be robust near military bases because of frequent transfers, says Smith.
“I always tell the buyers not to go too far with upgrades,” says Smith. “It’s best to put money into hardwood and tile flooring or to extra space but to spend the least amount out-of-pocket.”
Poole says he recommends the options that give you the most bang for your buck, such as additional finished square feet.
“I suggest that they spend the bulk of their money on options on a finished basement and the kitchen and master bathroom, but not on upgrading the carpet or getting fancy lighting fixtures,” he says.
Hughes says comparing a new home with more included features with one that requires costly options can help buyers avoid going over budget.
VA Loans and Newly Built Homes
VA loans have competitive interest rates and offer 100-percent funding without mortgage insurance, says Hughes. They typically have easier qualifying guidelines, allowing for lower credit scores and higher debt-to-income ratios than conventional loan programs, he says.
“VA loans work well with new construction because the VA requires an extra inspection and appraisal just before the closing to make sure the home is worth the amount of the loan,” says Hughes. “New homes have a better shot at getting a VA approval based on the condition of the home.”
Poole says that a potential benefit of financing with a VA loan is that the builder could allow the buyers to make a smaller deposit since they don’t have any down payment requirement.
“Military families want to be taken care of,” says Smith. “Their referral network is amazing, too, so if you listen well and help them make good choices, you can build a big business with them.”