Did you know the military movement cycle from one installation to the next is generally every three years? This transition is military life requires planning to ensure you have a smooth transition from one installation to the next.
What are the housing options for Servicemembers?
Military servicemembers have three options for housing:
- live on-post (housing or barracks, depending on the rank and marital status)
- rent off-post
- purchase a house
Why do families choose to buy a home vs. living in on-post housing?
For many service members, purchasing a house fits their needs. VA loans generally have a lower rate, no down payment, and can sometimes put all of the closing costs wrapped into the loan – what a relief for service members!
The downside? That is a short time for any kind of property appreciation or loan paydown. So when a servicemember has to move, many of them are in a position of having too high of a payoff to sell the house the traditional way and not have to bring cash to the closing table just to sell their house.
Many families decide not to live on-post due to lifestyle choices and preferences. For those that do opt to live on-post, there are many advantages, such as proximity to work, schools, and the amenities on post.
Common factors that are usually in the discussion about whether to live on or off post include the following:
- Wait time to get on-post housing
- Types of housing available on-post
- Nearby cities of the installation
- Quality of life preferences
- Rent and home prices off-post
What obstacles do servicemembers face when selling a home after PCS?
Service members often face challenges when selling a house while in the military. When servicemembers receive orders, they have a tight deadline and are often balancing military obligations within the tight demands of the housing market.
To better understand, let’s look closely at the Smith family’s personal story:
The Smiths go through their permanent change of station (PCS) from Fort Moore, GA, to Fort Campbell, KY, in 2021 and now live in the Clarksville, TN, area just outside of Fort Campbell.
The Smiths have a small family and a dog so they want to buy a house that they can call home for the next three years. The interest rate environment at that time was historically low and the Smiths were able to qualify for a rate in the 3% range and include all of their closing costs and fees into their VA loan, allowing them to pay $0 at closing!
As 2024 comes around, the Smiths are preparing for another PCS move across the country to a new duty station and now need to sell their house.
Obstacle #1: Low Equity and House Needs Repair
Their house in Clarksville has appreciated a decent amount, but since they included all their fees and closing costs into the loan, their actual equity in the home is very nominal, leaving little to no equity at all. Not to mention, there was some wear and tear throughout the house so it is in decent condition, but it needs a bit of cosmetic work.
Obstacle #2: Decide if you should hold the property and become a landlord
The Smiths do not want to be landlords and add to their already busy lives, and the risk of potential eviction, managing a house, or even a property manager from out of state gives them anxiety as well. Not to mention, if just one big ticket item goes out, such as the HVAC, then that’s on them to pay for!
Risks of holding the property
- The financial strain of the mortgage payments and moving to a new location
- Repairs and maintenance
- Finding, interviewing, and hiring a property manager
- Becoming a landlord
Obstacle #3: Selling the Traditional Way – Using an Agent
The Smiths look to sell their home the traditional way with a local agent who was referred to them by a friend. Sounds simple, right? Just list the house, allow walkthroughs and open houses, and then sit back for an offer and close when you want.
Well, no, it’s just not as easy as it was in 2020 and 2021. The market has shifted, and many sellers are waiting much longer to sell their homes. Moreover, buyers are showing trends of requesting more upfront concessions and repairs.
If you are a military family on a movement cycle, then time is not necessarily on your side. Plus, in order to sell the home you have to make sure there is enough equity to satisfy the loan payoff. Unfortunately, this is where many military selling houses find themselves in a bind.
Obstacle #4: Listing Price is often too high due to low equity (To help you pay off the home)
The Smith’s agent listed the house too high since there has to be enough equity to pay the agent commissions, the closing costs, any repair request, and the loan payoff. Whew, that is a lot! Houses that are not priced correctly will sit on the market longer and the incentive for agents is to just sell the house, knowing he or she will still get a percentage cut and will keep sellers within their listing agreement for sometimes up to six months! Military members typically cannot wait that long. The Smiths do not want the burden of another mortgage payment, property taxes, utilities, or property maintenance. In addition, they do not like the idea of being landlords and adding to their responsibilities.
Risks of Selling the Traditional Way:
- The house does not sell when you want it to
- The house sells for less than what you want it to
- The servicemember has to bring cash to close to payoff the loan
- The servicemember is left with a mortgage and paying for second housing if it does not sell on time
They do not want to rent the home; they want the burden and obligations of the home off their plate, and now selling on the market means they have to come to closing WITH money to pay off the loan.
The Smiths decide to start looking for a solution and begin their search for a home buying company. The first company they found was a big corporate company that did not listen or care about their situation, back to the drawing board.
How MTHS saves servicemembers the headache of selling during PCS
The Smiths then start to look locally and find a veteran-owned and operated home buying company and they found My Tennessee Home Solution. The Smiths quickly learn about one of the programs offered by My Tennessee Home Solution – Equity Protection Program – which is designed for situations just like the Smiths are in!
As soon as the Smiths filled out the website inquiry form, they were immediately welcomed to the My Tennessee Home Solution team and were able to schedule with a home buying specialist that next morning.
My Tennessee Home Solution’s Equity Protection Program was a perfect fit for the Smiths because the Smiths are no longer responsible for the property; they can sell it with minimal equity, and they can close on the timeline of their choice.
After the appointment, the Smiths signed an agreement and felt the immediate relief of having the house taken care of.
The example of the Smith family is just one of many that My Tennessee Home Solution experiences when it comes to PCS and not knowing what to do with the house.
Other scenarios that make the Equity Protection Program a good fit
- Behind on mortgage payments
- Divorce
- House needs repairs but unable to complete in order to sell it
What do you need to know when moving forward with our Equity Protection Program?
Once an agreement is signed, the homeowner agrees to sell the home subject to the existing loan, which means that at closing, the deed will be transferred to the purchaser, and the mortgage itself will remain in the seller’s name.
The purchaser takes over all payments related to the home (including mortgage, utilities, insurance, and taxes) from this point forward. After closing, the mortgage will still show up on the seller’s credit report (if pulled) if you’re interested in getting a loan or line of credit in the future.
At whatever point the purchaser decides to refinance or completely sell the home, the seller’s name will then be removed from the mortgage since it will be getting paid in full at that time. There are many instances where homeowners sell their home to us subject-to their existing loan and go on to purchase a new property immediately.
Are you a servicemember facing a permanent change of station and needing to sell your home quickly and stress-free?
My Tennessee Home Solution understands your unique challenges and is here to help. We specialize in working with military families, offering fast and fast cash offers with no hidden fees or lengthy processes. Don’t let your move be more stressful – call My Tennessee Home Solution today!