Ex-Marine Helps Veterans Fulfill American Dream

First the good news:

John Akerele has discovered a market that is so hot that even in early December, typically the slowest month for real estate, his newest office, in Van Nuys, recorded 10 sales.

Now the bad news:

The market is specialized and takes a lot of hard work, perseverance and time.

Akerele concentrates on veterans and first-time home buyers, and in his case, the adage “It takes one to know one” applies.

He is a veteran who served on active duty with the U. S. Marine Corps for 10 years. His wife is still on active duty. She is an Air Force career officer.

At 34, Akerele is the age of many of his clients, who range mainly from 25 to 35.

Like most of his clients, he has children: three boys, 6 and 8 years and 6 months old.

And like many of his clients, he too was a first-time buyer not long ago.

It was four years ago, to be exact, and he was out of the service a couple of years and working for Hughes Aircraft.

“I had $1,600 in my pocket, a good job and a degree in engineering, but I had no idea how much it would take to buy a home,” he recalled. “One real estate lady just laughed at me when I said I had $1,600 to put down. When I heard later of a program for veterans to buy homes with no money down, I didn’t believe it at first, because I wondered why that lady didn’t tell me about it.”

The reasons became clearer as he studied real estate and earned his sales license while working at Hughes. (He just took his brokerage test and expects results this week, but he has a broker on his staff.)

One reason many real estate people shy away from dealing with veterans is that there is more risk when it comes to a potential buyer backing out of a transaction. As Akerele explains it, “With no money down, a veteran doesn’t have as much commitment.”

Another reason is that there is generally a smaller real estate commission, because houses financed by the Veterans Administration can’t cost more than $135,000 and often costs less. As Akerele puts it, “Most real estate people are attracted to the big deals, not so much to the $61,900 deals.”

$61,900? In California? “Sure,” he says. “You might find it in Lancaster, which is kind of far, but some people are making the drive, even from El Segundo, to save paying rent.”

Akerele philosophically likens his firm, American Housing Network, to well-known Southland auto dealer Cal Worthington, saying, “We’ll do what we have to do and go where we have to go.”

Akerle would even go to Needles to find a home for one of his buyers, although going that far isn’t usually necessary. He and his 23 other agents often find homes within the vicinity of his offices in Van Nuys, Orange and Santa Ana.

After resigning from Hughes in 1981, Akerle worked in a number of realty offices specializing in helping first-time buyers, particularly veterans, but he started his own company, using what he believes are some different approaches, last summer.

“One thing we do is pre-qualify buyers,” he said. “We don’t ask what they want to spend. We find out what they can afford to pay. We explain the payment situation and then look for homes that would meet terms that are comfortable for them.

“If the buyer is a veteran, we look for homes where there is enough equity so the seller has the ability to pay the buyer’s closing costs.” Of the 10 buyers at the Van Nuys office in early December, eight bought with VA loans and two bought with loans through the Federal Housing Authority. “Not one had to pay closing costs,” he noted.

Akerele and his agents work with other realty firms, usually on other company’s listings, because Akerele focuses on buyers, not sellers. “We don’t list property as a rule,” he said.

“We won’t turn down a listing if it’s the right kind, but we don’t target listings. Our ads are directed toward buyers, and--on an average for our three offices--we help 30 vets and first-timers buy homes every month.”

Vets needn’t be first-time buyers to get VA financing, and this is a common misconception, he added, explaining, “Most vets who do know about the VA program are under the impression that they can only use it one time, but that’s not true. What they must do, though, is pay off their last VA loan before getting another.”

Because many of his clients are veterans who are also first-time buyers, though, he generally takes the time to make them feel comfortable about buying. “A lot of first-time buyers are terrified.

“That’s why we go through the process in which we try to educate them,” he said. “You’d be surprised how many people we talk to haven’t ever had a savings account. That pattern of thinking changes when they become homeowners.”

Veterans have special problems that he also addresses. One is the paperwork necessary to get a VA loan, another reason why many real estate agents and brokers would rather not deal with the program.

“It takes a long time for the real estate person to get paid,” he acknowledged. After he and his clients complete the paperwork, it could take six to eight weeks for him to get a commission, in contrast with 10 days for conventional financing.

It also takes time, at times, just to see that the veteran has proper documentation, which Akerele will secure if necessary. The VA issued a bulletin this fall that stated: “We are receiving a substantial number of closed loan submissions which must be suspended or rejected because of material errors or the omission of items essential to a proper determination concerning a request for guaranty.”

Akerele says that the VA only rejected one loan of the nearly 200 he has sent for approval and that loan was denied because his buyer had an earlier VA loan that wasn’t paid off.

VA loans are available “to anyone who has served in any branch of the U. S. military for 181 days,” he continued. “You don’t have to have served for four years, as some people still believe.”

Because he specializes in helping veterans and first-time buyers, Akerele concentrates on lower-priced homes, mostly under $110,000, and many are condominiums.

The VA program often excludes condominiums, which, ironically, are more likely to fit VA criteria for price than single-family homes. This is what Akerele describes as “another reason a lot of real estate people might not want to get involved with veterans.”

However, he also considers it “a challenge.” “We get condos approved,” he said. “If there is any way possible, we find it to get the potential buyer a home.”

Interest rates are in his favor. “They haven’t been this low in about six years,” he noted. And this helps account for his healthy sales activity, even in December.

Another factor is location. All of his offices are in strip shopping centers. He gets a lot of walk-in traffic, and he claims that 20% of the people who walk in “actually purchase that day.” Of the 10 Van Nuys-office transactions in early December, three involved buyers who walked in.

Enough have walked in and purchased that he is already planning a fourth office, one in Palmdale that he expects to open by June. He is still looking for agents to staff his office in Van Nuys, which now has only two--not enough, he says, to handle the volume of potential buyers that exists.

“There is a tremendous market out there for first-time buyers, including veterans,” he said. “They still want the American dream. The only thing that has changed is that homes are smaller and cost more.”

And cashing in on this market isn’t easy. Akerele sighed. “I’m working very hard and putting in some very long hours to do this.”