There are 2 factors

- 1 is a misconception that VA financing is tough to get done, that with lower standards in underwriting there's more chance that the loan may not work out (which is a HUGE misconception, because with a solid preapproval, no one should fall out if the lender knows what they're doing!), that appraisals come in low on value, etc, etc (all these things are false, for the record)

- 2 is a real concern - VA buyers have the amendatory clause to protect them and give them an out if an appraisal comes in low.  Appraisers ARE looking for certain things (similar to FHA) on a VA appraisal that can be ignored on a conventional appraisal, VA buyers need certain things but are not allowed to pay for them (leaving the bill to a seller, or agent....eg the termite inspection in many states).  The VA product is also frequently used for it's $0 down payment - if additional assets/proof of funds beyond the minimum are not provided, it could be considered more risky to accept a VA buyer than a conventional buyer w/20% down, because if appraisal comes in low, there are minor inspection items, etc, the 20% down buyer could potentially flip to 15% or 10% down and have some money for those things that need addressed.

VA is a great product and our veterans should be able to use the benefit they've earned, but IMO the product needs to be brought more in line with conventional lending in terms of appraisal process and seller-protection on short appraisals to be competitive in the current marketplace.

Because of misinformation that some agents have

Where is the easy button?  Listing agents either don't know or don't care. In my market, a VA loan cannot compete with strong offers with no contingencies. 

John Meussner has this covered. There's also the issue that with fewer VA appraisers out there it can take longer to close a VA loan than a conventional loan.

Lack of knowledge. John Meussner  I hazard to guess that most listing agents don't know about the amendatory clause being an out to appraisal shortage.   Even if buyer waives appraisal and inspections and loan they can get out when there is a shortage... 

I believe listing agents and sellers are thinking back to GI bill houses and really have no idea that a VA loan is pretty similar to conventional.     The differences are:

less down payment which really has no harm or difference to seller

Property health and safety code violations have to be clean (could effect a sub par property but buyer agent should know not to match this loan tool with a rehab.

Buyer agent presenting preapproved VA needs to add in a bank statement with some cash, letter from lender that they can close a VA in 18 days, that choosing a veteran to buy their house does honor to our country and their neighbors.

Been through booms and busts with VA financing.

The borrower needs to at very least pay their own allowable costs.

The home needs to be in decent condition. Good roof and structural.

It would be great if the buyer could come in with a decent DP!

The market is competitive and everyone needs to compete!

John Meussner explained this far, far, far better than I could.  It is a brutal market.  0% down VA loans are a great product, but put that up against a 20% conventional loan or a cash offer and it's a VERY tough sell.  At the end of the day it's a financial decision and weighing out the risks and costs.

Most agents believe they are harder to get thru. Could be because of the extra inspection done, etc. for the buyer. 

I don't have a problem with them at all.

A seller in a seller's market wants the simplest and cleanest means to closing escrow.  Any government loan will have roadblocks that a seller will most likely choose to avoid if there are other better options.

I am seeing most loan deals having problems like never  before,  

To me it all comes down to having leverage and being greedy! 

VA loans have NO leverage and Sellers are being GREEDY... LOL

Yes...the Amendatory Clause protects the VA buyer and allows them to make a non-contingent offer and still be able to get out due to appraisal or condition. So...it is really not a non-contingent offer, is it? If a VA buyer can ignore the Amendatory Clause and has the willingness and ability to bridge any appraisal gap and finds a house in the condition to meet VA requirements and and can qualify for the loan payment in our market where the average 3/2 detached home sells for over $1.5M then more power to them.

As a seller...is that the buyer that I will select in a multiple offer transaction?

If you were a seller which offer would you choose?  More red tape or less?  More risk or less?

 John Meussner has the definitive answer!

In short - it's tough for VA and FHA buyers to compete with multiple offers, many of them cash and waiving appraisals etc.  When there's a will there is a way! I'd be like a dog on a bone to find a solution....

I've had success getting my VA clients offers accepted. I've had to communicate well with the listing agents and really work the offer. VA buyers can pay over appraised value as long as they have the funds of course. And let's face it, over 50% of home buyers in my area will pay an appraisal gap. They can get 100% financing so that's more they have to put toward an appraisal gap. Who cares if they get 100% financing? They deserve it! My lenders can get VA loans through in 3 weeks so that isn't an issue. Most homes my clients are making offers on aren't an issue. What I am having trouble getting accepted is FHA loans. These buyers usually don't have the funds to pay an appraisal gap. 

Listing agents like to see more down and with VA, there is no down.   However, if the Seller is a Vet, the likelihood of getting the home increases.

John Meussner has the best explanation here. Others’ experiences are god, but his words are the best. The thing that hits home, for me, is if the lender knows what s/he knows what they are doing, which could be a bigger issue than realized. 

Condition of the property and appraisals are the main concern. The misunderstanding of these requirements leave a negative feeling in the minds of many sellers and agents.

Uncertainty.

Bravo to what John Meussner said! It becomes an issue of competition in a very competitive market but it CAN happen.

Most listing agents don't know enough about VA loans to intelligently educate the sellers on why they should consider them. Same with FHA, most listing agents don't understand them so advise sellers to consider only cash or conventional. 

When we married and bought our first house up north, we used my husband's VA benefits. The agent we used was well versed in VA as was her broker and they knew how to present our offer to the seller's and which lender to use. Our VA offer beat out multiple offers because of their presentation and yes, there sometimes were multiple offers back in the 70s.

The loan closed in less time than a conventional would have taken and an added bonus for us was that the loan was assumable. When we eventually sold that house, interest rates were at record highs so there was fierce competition among the buyers who wanted that assumable 8% rate.

Sellers who either bought their house VA or are retired military seem to be more receptive to VA loans, even if the selling agent does not recommend it.

I do apologize for the confusion that your friends are experiencing. I am not an expert in mortgage lender, but I can reach out to a lender and gather some information and get back to you. I can tell you that because the market is a little wonky, and there is a lot of competition on homes to win contracts. My suggestion would be not to give up and continue to submit their best offers and something will work out.