VA Loan Seller Disadvantages: What It Costs Sellers (2026)

The real VA loan seller disadvantages come down to three things: a short list of fees the veteran isn't allowed to pay, a VA appraisal the deal can't skip, and an escape clause if that appraisal comes in under your price. VA charges the seller no fee of its own, and several of the reasons sellers give for passing on VA offers are years out of date. This page is written for the seller and the listing agent, and it takes each concern back to the regulation or VA document it comes from.

What a VA offer actually costs the seller in 2026

Start with what VA says about closing costs in general: "You (the buyer) and the seller can negotiate who will pay closing costs," and its funding fee and closing costs page lists commission, origination, discount points, the credit report, the VA appraisal, insurance, taxes, title insurance and recording fees as items open to that negotiation. No VA rule hands a seller a set share of the buyer's bill.

What VA does restrict is the buyer. The regulation opens flatly: "No charge shall be made against, or paid by, the borrower incident to the making of a guaranteed or insured loan other than those expressly permitted." VA restated it in Circular 26-24-19: "Fees and charges not expressly permitted by VA may not be charged to or paid by the Veteran obtaining a VA-guaranteed loan." That circular also lists the itemized fees a veteran may pay, and the list is short. Every legitimate charge outside it still has to be paid by somebody. That's where a VA deal can cost a seller something a conventional deal wouldn't.

The permitted items come from 38 CFR 36.4313(d), Circular 26-24-19 and, for discount points, 38 U.S.C. § 3703(c)(4)(B). The 2026 update to that circular, Change 1, changes only how lenders document the fees, not which fees are allowed. Deviations vary by state. VA stopped publishing maximum dollar amounts for most of them in 2024 and updated the list again in February 2026, so ask the buyer's lender which local fees it can put on the veteran's side of the Closing Disclosure. For how this looks from the buyer's side, our VA loan closing costs guide walks the full itemized bill.

The buyer's agent commission

For most sellers this is the line that matters. Circular 26-24-14 states the baseline plainly: "VA's regulation specifies that, generally, a Veteran cannot pay for real estate brokerage charges." It then opens a temporary local variance, effective August 10, 2024, letting veterans pay "reasonable and customary amounts for any buyer-broker charges" when the home is in an area where listing brokers are prohibited from setting buyer-broker compensation through multiple listing postings, or where that compensation "cannot be established by or flow through the listing broker." The charges can't be included in the loan amount, and the lender has to count them when checking whether the veteran has enough cash to close.

Three details matter when you negotiate:

• The variance "does not prevent the seller of the home from paying for the Veteran's buyer-broker charges."
• VA "does not treat the seller's payment of buyer-broker charges as a seller concession," so it doesn't eat into the 4%.
• VA calls the variance temporary and says it will develop a more permanent policy through notice-and-comment rulemaking. As of this writing, VA's circulars page still lists 26-24-14, and no rescission or final rule has been issued.

Concessions: allowed, never required

Beyond closing costs, VA allows seller's concessions of "no more than 4% of your home's reasonable value," the figure on the VA Notice of Value. VA's examples are paying the buyer's funding fee, paying off buyer debt, or prepaying hazard insurance. On a home with a $400,000 reasonable value, the ceiling is $16,000. A first-time VA buyer putting nothing down on a $400,000 loan owes a 2.15% funding fee, which comes to $8,600 unless the buyer is exempt (veterans receiving VA disability compensation are, for example). If the seller agrees to pay that fee, it uses $8,600 of the $16,000.

Those numbers are a ceiling. How VA's cap compares with FHA, USDA and conventional loans, and why the percentages aren't measured the same way, is covered in seller concessions by loan type. The buyer-side version, item by item, is in the guide to VA max seller concessions.

Can a seller refuse a VA offer?

Under federal law, generally yes, but it's narrower than "any reason at all."

The Fair Housing Act, at 42 U.S.C. § 3604, makes it unlawful "to refuse to sell or rent after the making of a bona fide offer" because of race, color, religion, sex, familial status or national origin. A separate paragraph covers disability (the statute's word is "handicap") of the buyer, anyone who'll live in the home, or anyone associated with the buyer. Veteran status isn't on either list, and neither is the kind of loan a buyer uses. These rules reach most sales and any sale handled through a broker; a narrow exemption in 42 U.S.C. § 3603(b) for some owners selling without one still leaves the advertising rule in place. Choosing a cash or conventional offer over a VA offer on its terms doesn't, by itself, violate the federal statute.

The limits:

• A financing policy can't stand in for a protected trait. Some VA buyers have disabilities. Turning one away over disability generally violates the Act, whatever reason is given for it.
• Advertising counts too. Section 3604(c) separately bars any notice or advertisement indicating a preference based on a protected class. Listing copy is covered.
• State law can go further. California's Government Code § 12955 makes it unlawful "for the owner of any housing accommodation to discriminate against or harass any person because of" a list of traits that includes "veteran or military status."

About source-of-income laws, which get mentioned a lot in this debate: they vary by state and locality, and at least California's is written for rentals. Its definition of "source of income" is "lawful, verifiable income paid directly to a tenant," or paid to a landlord on a tenant's behalf. It isn't written with a buyer's mortgage in mind. Whether a blanket "no VA offers" policy breaks a particular state's veteran-status or other protections is a question for a fair-housing attorney in that state, not something this page can settle.

VA knows this happens. In a 2023 report to Congress, it described a stretch when cash offers dominated, made worse by "selling agents and sellers who elected not to review offers where financing was involved, including offers from Veterans who wanted to use their VA Home Loan benefits" (VA, Recommendations for Improving Appraisal Delivery Times).

Where the reputation comes from: the appraisal and MPRs

This part of the concern is well founded. A VA purchase depends on VA's own valuation, the reasonable value stated on the Notice of Value, and the loan can't be bigger than it allows. According to VA's escape clause page, a buyer who goes ahead after a low value has a loan "capped at the lesser of the agreed-upon purchase price or the reasonable value."

How often does the value fall short? VA's Quick Reference for Real Estate Professionals says "90% of initial VA Purchase appraisals met or exceeded the contract sales price in FY 23." The 2023 report to Congress gives 91.38% of VA appraisals for fiscal 2022. So roughly one VA appraisal in ten comes in below the contract price. That's the real exposure, and it's the reason to price a listing on comparable sales rather than on hope.

Tidewater: the listing agent's two business days

Before a low value becomes final, VA gives the parties a chance to argue for the price. Under the Tidewater procedure, if the appraiser expects the value to fall below the sales price, the appraiser must notify the point of contact named on the appraisal request and allow two business days for that person to submit comparable-sales data, according to VA's appraiser training on Tidewater and ROV. VA's 2023 report describes the window as 48 hours and says the real estate agent, lender or veteran can supply the data. The notice goes to whoever is named on the request, which may not be you, so ask the buyer's lender who the Tidewater contact is, or send comps through them. For a listing agent, this is the one point in a VA deal where you can directly change the outcome. Have your comps ready (address, sale price, sale date, gross living area and a copy of the listing), because VA says the appraiser can't discuss the expected value during the process.

After the Notice of Value is issued, the next step is a reconsideration of value (ROV), and VA's training material says the request has to come from the veteran borrower, not the seller or listing agent. VA reviews the appraisal, the veteran's data and its own market data, and amends the Notice of Value if a change is warranted. The mechanics are in our guide to VA reconsideration of value.

Minimum property requirements

The VA appraiser also checks the home against VA's minimum property requirements. VA's real estate quick reference puts it this way: "Before the loan can be approved, the lender will arrange for a VA appraiser to assess the home to ensure that it meets the VA's minimum property requirements (MPRs)." The full checklist is in our VA minimum property requirements guide.

For a seller, the timing matters more than the cost. VA Circular 26-22-11 states that MPR repairs identified on a required wood-destroying pest report "must be completed prior to guaranty," meaning before VA will guarantee the loan. For a home that fails an MPR, the quick reference tells agents to "contact the lender to discuss the potential for an MPR waiver." That's an option to ask about, not something to count on.

The cost of those repairs is no longer automatically the seller's. The same circular says veterans "may also pay for any repairs required to ensure compliance with MPRs," and may be charged for a wood-destroying pest inspection when the Notice of Value requires one. It adds that "Veterans are encouraged to negotiate the cost of the wood destroying pest inspection and repairs with the seller." So who pays is up for negotiation. The repairs are on your property, though, so they only happen with your cooperation.

The escape clause: what it does and doesn't let the buyer do

The clause comes from 38 CFR 36.4303(k). When the veteran signs the purchase contract before receiving the Notice of Value (the normal order of events) and the price turns out to exceed VA's reasonable value, VA can't guarantee the loan unless the contract includes, or is amended to include, a provision that reads substantially as follows:

It is expressly agreed that, notwithstanding any other provisions of this contract, the purchaser shall not incur any penalty by forfeiture of earnest money or otherwise be obligated to complete the purchase of the property described herein, if the contract purchase price or cost exceeds the reasonable value of the property established by the Department of Veterans Affairs. The purchaser shall, however, have the privilege and option of proceeding with the consummation of this contract without regard to the amount of the reasonable value established by the Department of Veterans Affairs.

From the seller's side of the table:

• It has one trigger. VA says the clause "may not be used to cancel a loan purchase contract for any reason other than in response to the reasonable value established by VA being lower than the contract price." Inspection findings, MPR failures and a credit denial are handled by whatever other contingencies the contract contains. The clause doesn't cover them.
• It doesn't force a price cut. If the value is low, VA lists the buyer's options as negotiating a lower price, paying the difference from the buyer's own funds, or exiting without forfeiting earnest money. You can hold your price, and the buyer can choose to bring cash.
• It can't be struck. VA states that "in the event the clause is not in the sales contract, VA will not guarantee the loan." An addendum removing it removes the financing.
• New-construction upgrade deposits aren't covered. VA says deposits to a builder for upgrades "are not considered earnest money and are not covered by the VA Escape Clause."

The full text and its structure are in our VA escape clause guide, and VA loan earnest money covers what happens to the deposit.

How long a VA sale takes

VA's real estate quick reference cites ICE Mortgage Technology data for 2023: an average of 32 days to close a VA loan, against 45 for conventional and 46 for FHA.

Keep two caveats with that chart. VA published these figures in material meant to promote the program, and they're 2023 averages that tell you nothing about a given contract. They're still the numbers VA puts its name to, and they cut against the idea that VA deals drag.

The step that's specific to a VA timeline is the appraisal. VA's 2023 report to Congress put average VA appraisal turnaround for purchase loans at 9.0 business days in fiscal 2022 and 6.9 in fiscal 2023 through March 1, 2023. VA counts from the date the lender requests the appraisal to the date the appraiser uploads it, and doesn't exclude delays in getting access to the property. That makes quick showings for the appraiser one of the few timeline levers a listing agent actually controls. VA sets a completion deadline for each state and county on its appraisal fee and timeliness schedule, counted from the first business day after assignment with weekends and federal holidays excluded. Our VA appraisal fee schedule lists every state's deadline, and the VA loan process timeline covers the whole sequence from contract to closing.

Five seller myths, checked against the sources

"The seller has to pay all the VA buyer's closing costs." False. VA says the buyer and seller negotiate who pays closing costs. The veteran can legally pay the appraisal, title, recording, credit report, prepaids and a lender charge of up to 1%. What the seller may end up covering is the narrower set of charges VA won't let the veteran pay, such as the buyer's agent commission.

"VA makes the seller pay for the termite inspection and repairs." Out of date. Since June 15, 2022, veterans may pay for a required wood-destroying pest inspection and for MPR repairs (Circular 26-22-11). Who pays is a negotiation.

"VA appraisals always come in low." VA's figures say about nine in ten initial purchase appraisals met or exceeded the contract price in fiscal 2023. The remaining one in ten is a real risk, and it's why the Tidewater window matters.

"VA loans take forever to close." VA's cited 2023 averages put VA at 32 days, ahead of conventional (45) and FHA (46).

"The escape clause lets a VA buyer walk away for any reason." No. It applies only when VA's reasonable value comes in below the contract price. Other exits depend on the contingencies you agree to, the same as with any buyer.

One more figure, since sellers ask how likely a VA deal is to close. VA's quick reference says that in 2023, "86% of Veteran borrowers who ordered an appraisal closed their loan." That's VA's number, it isn't compared against other loan types, and it doesn't break out why the other 14% didn't close.

Bottom line

A VA offer doesn't carry a VA fee for the seller. What it carries is a rule that the veteran can pay only the fees VA permits, which usually leaves the buyer's agent commission and any unlisted third-party fees for the seller or lender to cover. It also carries an appraisal the deal can't skip and an escape clause tied to that appraisal alone. Federal law generally lets you turn a VA offer down, within limits, and some states protect veteran status directly. Several of the reasons usually given for doing so don't match VA's current rules or its published data. If you're a veteran on the buying side of your own move, start with our 2-minute eligibility check.