Military life comes with many challenges, and a big one is having to relocate frequently. Particularly after receiving a Permanent Change of Station (PCS) order, you may feel pressure to sell your house as quickly as possible so that your relocation can go smoothly.
Fortunately, there are many programs and services to help military members transition. Here are some options for pulling a successful sale, regardless of where you stand on your mortgage.
Check your equity to get started
As a military member selling a house, the options available to you depend on your equity, which is the percent of your home that you own outright. Essentially, equity is the market value of your property minus the amount of money you still owe on your mortgage loan. Real estate professionals recommend that you own at least 10% of your home outright before selling. This minimum equity ensures that you’ll have the funds for necessary home sale expenses (such as staging, repairs, and closing costs), plus some leftover profit to put towards your next down payment or security deposit.
To determine your home’s equity, you first need to assess your property’s fair market value. For a quick estimate, check out HomeLight’s Home Value Estimator. The tool uses an automated valuation model to give you a ballpark figure for what your home is worth in the current market.
Explore military house selling programs and resources
There are several helpful programs and resources available to service members dealing with a PCS order. Here are a few.
Financial counseling options
Military OneSource has numerous options for helping you navigate your current finances, manage any debt you may have, plan and budget for your future finances, and access tax breaks available to service members. All of this information is integral in order to know how a PCS order may financially impact you.
Military OneSource offers a financial calculator as well as a free personal financial counselor to help you ascertain where you are financially and aid you in working toward your financial and homeownership goals.
Servicemembers Civil Relief Act (SCRA)
The Service Members Civil Relief Act (SCRA) is complicated, so it’s advisable to reach out to legal counsel or a financial consultant who frequently works with service members in order to best understand how to exercise the SCRA’s rights.
Some of the most important aspects of the SCRA as it relates to housing are that it provides:
- protections against home foreclosure,
- protections against property repossession,
- the option for service members to opt out of a residential housing lease without penalty, and
- a reduction in “the interest rate on any pre-service loans to a maximum” of 6%.
Home Loan program
The Department of Veterans Affairs (VA) offers a Home Loan program that “guarantees a percentage of the loan.” Further, it enables service members, National Guard members, reservists, veterans, and some surviving spouses to obtain a mortgage with no down payment, no prepayment penalties, and at significantly lower interest rates.
To best understand this program and see if it is right for you, you can explore the “VA Home Loan Guaranty Buyer’s Guide” and/or consult a real estate professional who has frequently worked with service members.
VA-backed mortgage as marketing
If you purchased your home with a VA loan, then VA loans are “assumable,” which means you might be able to transfer your loan terms to another prospective buyer so long as they meet your current lender’s eligibility requirements. With a VA home loan assumption, the buyer takes over your mortgage, including your loan balance, your interest rate, and your monthly mortgage payment.
A VA loan assumption may be an attractive option for buyers if interest rates are significantly higher at the time of sale than they were when you secured your VA loan. Kelly Hollowell, a leading real estate agent in Chesapeake, VA who sells 99% of her listings, emphasizes, “If a buyer can assume a VA loan because they meet the criteria, [then] that’s fabulous because they’ll have a much lower monthly mortgage payment than with a new loan.”
Another benefit of VA loan assumption is lower closing fees. In a traditional home sale, the seller pays 9% to 10% in fees upon closing, while the buyer pays 2% to 5%. With a VA loan assumption, the buyer pays a VA funding fee that is between 0.5% and 2.25% and any closing or title fees depending on the property’s location.
When you transfer your VA loan, request a release of liability from your lender or servicer to transfer liability for payments to the buyer. If you don’t complete this form, then your buyer could damage your credit if they make late payments or default on the mortgage.
Managing the move itself can be stressful and feel overwhelming. However, there are resources to help you make the move as efficiently, quickly, and stress-free as possible.
- Military OneSource has “Plan My Move,” which helps you make a custom checklist of what needs to be done based on your current location, PCS order, and timeline.
- PCSmyPOV offers resources to help you with the logistics of moving and/or storing your personal vehicles.
- Military OneSource offers MilitaryINSTALLATIONS, which provides you information about the programs, resources, and communities available to you in your new location.
- Homes.mil helps military members find rental housing if you are not yet ready to purchase a home in your new location.
Federal Housing Finance Agency Short Sale Assistance
The Federal Housing Finance Agency’s (FHFA) Short Sale Assistance program helps military members with an underwater mortgage to sell their home. You’re underwater on your mortgage if the amount you owe on your home loan is higher than the fair market value of your property.
Lenders must approve eligible military members with a PCS order for a short sale immediately, even if they are current on their existing mortgage. Service members are also exempt from deficiency judgments when receiving permission for a short sale and are “relieved of any request or requirement for a cash contribution or promissory note so long as the property was purchased on or before June 30, 2012.”
Work with a Military Relocation Professional (MRP)
Selling on the market is the way to go if a top sale price is your main priority. For a smooth sale, partner with a real estate agent who has significant experience selling homes for military personnel. These real estate agents understand the unique challenges of a PCS order and can help you make the most of benefits and programs available to service members as well as help you get your home ready to sell.
A surefire way to know that an agent is qualified to handle a military home sale is to see if they have a Military Relocation Professional (MRP) certification. This certification is from the National Association of Realtors® (NAR) and educates real estate agents on the processes and procedures involved in military relocation. HomeLight’s Agent Match platform can help you find real estate agents who have experience with service member clients.
Still, you shouldn’t pick just any agent with an MRP certification, because the quality of your real estate agent may significantly impact on your home’s sale. According to the NAR, homes sell faster and for about 20% more money than homes sold solely by the owners, and top agents may sell for 10% above the home sale price of average real estate agents.
Furthermore, Hollowell points out that “It’s critical for military members to prepare their home sale with a professional that can help orchestrate all of the details and that comes with experience.”
For a fast sale, sell to a cash buyer
If you need a lightning-fast sale, consider selling your home for cash to a direct buyer. Direct buyers are companies or individuals that purchase your house for cash in a matter of days or weeks as opposed to the months it typically takes to sell a home on the market. When you sell for cash, you bypass time-consuming home sale tasks such as lighting, remodeling, staging, open houses, and showings — not to mention waiting on a buyer’s mortgage approval.
Additionally, your home sale is less likely to fall through when you sell to a direct buyer. If you sell to a traditional homebuyer, their offer will most likely include contingencies, which are clauses in purchase agreements that allow a buyer to back out of a deal. For instance, your sale may be contingent on your buyer’s home sale. Thus, if they can’t sell their home, then they can back out of buying yours. According to the NAR, contingencies account for more than 7% of failed home sale transactions.
If you’re interested in finding a cash buyer, try HomeLight’s Simple Sale platform. All you need to do is provide information about your property, and Simple Sale will gather no-obligation offers from its extensive network of cash buyers. This way, whatever route you take, you know that you’re making an informed decision.
Home selling assistance is available for military members
At the end of the day, there’s a long list of options to speed up a military home sale. If you have any questions about programs you may be eligible for, reach out to a real estate agent with extensive experience helping service members move. They can help you understand your options and current market conditions as well as direct you to other valuable resources.
Header Image Source: (Jennifer Scales / Unsplash)
- "Financial Counseling Services for a Secure Future," Military OneSource (May 2020)
- "Eligibility requirements for VA home loan programs," U.S. Department of Veterans Affairs (June 2022)
- "VA Home Loan Assumption: What Buyers Need to Know," Veterans United Home Loans (May 2022)
- "FHFA Announces Short Sale Assistance for Military Homeowners with Fannie Mae or Freddie Mac Loans," Federal Housing Finance Agency (June 2022)