Homebuyer 101: VA Appraisal

4 minute lesson

 

Lesson Summary

• VA appraisals focus on the value of the home and health and safety issues.
• The appraiser may mark health and safety issues that need to be fixed before the appraisal is completed.
• The home buyer does not get to choose the appraiser; it is selected by VA.
• The cost of the appraisal is typically around $800, but may be higher for properties located further away.
• If the appraised value does not meet expectations, the appraiser may request comparables to justify the purchase price.
• The appraiser’s main goal is to determine the value of the property and ensure it meets VA standards.

Imagine a captain skillfully navigating a ship through uncharted waters, much like a VA appraisal guides a home purchase to safe harbor.

Just as a foundation gives strength and stability to a house, a VA appraisal provides critical assurance of value and well-being in your potential new home.

Understanding VA Appraisals

Navigating the VA appraisal process requires grasping its dual focus: assessing the property’s market value and ensuring the home meets specific health and safety standards. Unlike traditional appraisals, this distinctive approach not only determines if the price reflects the current real estate climate but also verifies suitability for habitation.

A VA appraiser’s evaluation might pause the purchase process to address concerns, yet it’s a safeguard ensuring your investment aligns with both market norms and the VA’s robust criteria for a secure and healthy living environment.

Assessing Home Value

A VA appraisal ensures the price matches the home’s true market value and safeguards the buyer’s investment.

The VA appraisal protects a veteran’s financial interest in a property beyond a typical market analysis.

It evaluates recent sales of comparable properties, adjusting the final valuation based on unique features, location, and condition of the home.

A correct appraisal assures that the loan amount aligns with the property’s worth, securing the veteran’s future and the VA’s investment.

Identifying Health and Safety Issues

For VA appraisals, the primary concern aligns with the occupancy conditions, ensuring they meet VA’s stringent health and safety protocols. Appraisers monitor various elements such as structural integrity, which includes foundations and load-bearing walls, and they report any flaws that may pose risks.

Chipped paint may seem minor, but to VA appraisers, it signals possible lead exposure. The staircases lacking handrails also draw red flags for falls and injuries.

Even seemingly marginal issues—a cracked window, for example—can constitute a safety hazard that VA standards won’t overlook. The VA appraiser will earmark such defects for immediate correction.

Water damage or signs of mold provoke concerns about air quality, potentially detrimental to a homeowner’s health. Similarly, improperly installed electrical systems not only violate code but could lead to severe safety risks.

Each observed issue halts the appraisal process until remediation verifies the home is salubrious and secure. It’s a measure that underscores the VA’s commitment to veteran homeownership that’s dependable and hazard-free.

Ultimately, these appraisals help veterans avoid homes that could be harmful or fiscally onerous due to hidden safety or health issues. This tireless scrutiny ensures livability that aligns with the VA’s high standards for veteran housing.

Preparing for a VA Appraisal

Before the appraiser steps through the front door, be proactive by addressing any visible health and safety issues. Ensure peeling paint is remedied, railings are secure, and broken windows are repaired. These corrections can expedite the appraisal process, ridding potential roadblocks that can delay or derail your home purchase.

Recognizing that the appraiser isn’t in charge of the intricate workings of a home inspection, it’s wise to consider a separate, comprehensive assessment for your peace of mind. By doing so, you’re not only preparing for the VA appraisal but also safeguarding against unforeseen complications that might not fall under the VA’s specific scope of inspection.

Handling Required Repairs

When a VA appraisal flags health and safety issues, swift attention is key to move forward.

• Peeling Paint: Repair peeling or chipping paint, especially on older homes where lead paint may be a concern.
• Handrails: Install or repair handrails on all staircases to ensure safe navigation.
• Broken Windows: Replace any cracked or broken windows to secure the property.
• Faulty Electrical Systems: Correct any exposed wires or unsafe electrical conditions.
• Structural Integrity: Address any concerns that compromise the structural soundness of the home.

Seller cooperation is pivotal in remedying the noted defects.

The VA will not finalize the appraisal until all repairs are completed and re-inspected.

Anticipating Appraisal Costs

The appraisal is a non-negotiable, requisite aspect of your VA loan process.

In Colorado Springs, you can generally expect to pay around $800 for the VA appraisal service. This fee is borne by you, the buyer, and typically included in your closing costs.

However, this standard fee may escalate if the property’s location requires additional travel or effort. For instance, remote or rural properties might incur charges ranging from $1,000 to $1,200.

Ultimately, understanding these potential outlays beforehand allows you to budget accurately. It’s crucial to have clarity on these costs as they contribute to the overall financial commitment of purchasing a home.

The Appraiser Selection Process

The VA appraisal order initiates an impartial selection mechanism within the VA system. It’s designed to ensure fairness and prevent any undue influence from external parties.

In essence, when the appraisal request is submitted, VA employs a “round-robin” method. This system assigns an appraiser from a pool of eligible professionals, localized in the same area as the subject property, such as Colorado Springs.

This randomized process promotes equitable treatment and industry standard practices. It separates clients, lenders, and agents from the appraiser selection—maintaining a level playing field.

VA’s Role

The U.S. Department of Veterans Affairs exerts a safeguarding influence over VA appraisals. Their primary goal is to maintain a high standard of residence for veterans.

By providing a guarantee on the loan, the VA seeks to ensure that the property’s value aligns with the agreed-upon sale price. This is to protect the financial interests of both the veteran and the government, minimizing the risk of overpaying for a home.

The VA’s protocol is meticulous, emphasizing the health and safety of the property. An appraisal flags critical issues that must be rectified—enhancing the living conditions for the veteran.

Moreover, their system impartially selects an appraiser, warding off any potential biases. If the appraisal raises any red flags, the VA’s processes ensure veterans are not investing in overvalued properties, offering recourses such as the Tidewater Initiative to rectify discrepancies.

Appraisal Regions and Turnaround

VA appraisals are delegated regionally to ensure local market expertise and efficiency.

1. Order Placement: The lender requests a VA appraisal through the VA’s central system.
2. Appraiser Assignment: The VA’s automated system assigns an appraiser from within the property’s region.
3. Inspection Timeline: Appraisers generally have 10 business days to complete the appraisal report.
4. Valuation and Tidewater Initiative: If the appraised value is lower than expected, the Tidewater Initiative kicks in, prompting real estate agents to provide comparable sales to support the value.
5. Report Submission: The finalized report with the appraised value is submitted to the lender for review.

Turnaround times can vary, but typical expectations range from 7 to 10 business days.

Timely resolution of any identified health and safety issues can expedite the appraisal process.

Navigating Appraisal Outcomes

When the appraisal report lands in your hands, it’s crucial to review the estimated value and condition remarks methodically. If the valuation falls short of the purchase price, or if health and safety issues are flagged, these elements can become negotiation levers between buyer and seller. Understanding these factors is pivotal in progressing towards a successful closing.

However, should the appraiser invoke the Tidewater Initiative, this is your signal to collaborate actively with your real estate agent. Prompt provision of comparative market data is key to potentially justifying the agreed-upon selling price and avoiding a stall in the process. Time is of the essence, as the VA bestows a mere 72-hour window to respond effectively.

Dealing with Tide Water Initiatives

When you encounter a Tidewater situation, it’s often a surprise, one triggered when comparable sales data is inconclusive or lacking. The appraiser essentially signals a need for additional information, challenging the agreed-upon sale price.

This calls for immediate and organized action from both your side and your real estate agent’s. Any delay can complicate the transaction, potentially leading to renegotiation or, in some cases, deal cancellation.

Fortunately, with a skilled realtor and lender team, you can navigate the Tidewater process by swiftly supplying relevant comparable sales data. This collaborative effort (between the lender, agent, and you) aims to validate or adjust the property’s value.

Often, the comparables you present can close the valuation gap, reinforcing the sale price and enabling the appraisal to continue. However, this success hinges on invoking persuasive and contemporaneous evidence which portrays the real market conditions.

If the Tidewater initiative is unsuccessful, you may need to confront a renegotiated deal price. This could mean further discussions and potentially a bit of a setback. Yet, understanding this possibility allows you to approach VA appraisals strategically – with an eye on both valuation and negotiation.

Indeed, a Tidewater notice is not an appraisal death sentence. With proactive collaboration, it can become just a hiccup in the closing process. Patience, thorough communication, and quality evidence are your best tools to keep the transaction moving forward.

Exploring Reconsiderations of Value

A Reconsideration of Value (ROV) is a procedural recourse in the VA appraisal process. When the appraised value falls short of the anticipated sale price, stakeholders have the option to seek an ROV.

This process begins post-appraisal and allows the lender or the buyer’s agent to present new or overlooked comparable sales evidence. The goal is to illustrate that the initial appraisal may have undersold the property’s market value. These comparables should reflect similar properties, in close proximity, that have sold recently.

The VA appraiser will then reevaluate the provided comparables and reassess the property’s value. It’s crucial that the additional evidence be substantial and pertinent, as the appraiser must justify any adjustments in value to the VA.

If the ROV results in an adjusted value that meets or exceeds the contract price, the transaction can progress seamlessly. If not, the parties may need to renegotiate terms to align with the revised valuation, making the ROV a critical step for moving forward when valuation discrepancies arise.