What Are The Common Va Appraisal Problems
Every property that is purchased using a VA home loan must meet certain minimum property requirements . These items ultimately comprise the VA appraisal checklist.
These are qualities that prove that the home is safe and sanitary for a veteran to live in. While it may seem like a few of these characteristics are relatively arbitrary, homebuyers should actually be grateful they exist. This is the governments way of helping to protect homeowners from purchasing a house that could potentially be a money pit or unfit for veterans to live in.
Some of the minimum property requirements are relatively easy to guess: the home must have no obvious safety issues, have adequate living space, must be zoned for residential use, and essential systems must be in great working order. For a more extensive list of the MPRs that an appraiser will be looking for, see the list below:
- Adequate heating
- No electrical or plumbing problems
- Clean drinking water
- No termite or pest infestations
- No obvious issues with the infrastructure or defective construction
- Property accessibility
Within each of these categories, there are a few common VA appraisal problems that homeowners face. For more information on what issues could jeopardize your funding, you can see the breakdown of some of these common issues below.
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What Are Va Loans
If youre not close to the military, you may not even know what a VA loan is. The VA home loan is an earned benefit for military members and veterans. It allows buyers to finance homes with no down payment or mortgage insurance.
VA mortgages are attractive to mortgage lenders because the loans are backed by the federal government. The lender wont lose money if the buyer defaults.
Related: 10 biggest benefits of VA home loans in 2019
These are arguably the best mortgages out there for borrowers. Mortgage data tracker Ellie Mae reports mortgage statistics nationally. And, in its November 2018 Origination Insight Report , it found that VA loans had the lowest mortgage rates. Yes, even requiring zero down, VA borrowers paid lower rates than FHA and conventional borrowers.
But how are they for sellers?
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What To Do If Your Va Appraisal Comes In Low
So, you found your dream home, got your accepted offer, and everything is flowing along smoothly with you lender . Youve already picked out the new colors for the bathroom & kitchen, found all you need to know about schools in the area, and have already decorated the entire home in your mind. Its a wonderful and exciting process purchasing a new home. You get a phone call from your lender, and they have some not-so-great news. The 3rd party appraisal came in with a value less than your accepted offer. No lending institution will lend more than the appraised value of the home, and clearly this can be an issue if the appraisal comes in low. Yikes!
So, what exactly does this mean? Do you lose the home? Can you still continue? Luckily, there are a few options available to a VA borrower:
- Buyer comes in with the difference
- Buyer pays the difference in value between the accepted offer and appraised value of the home
Can You Challenge A Va Appraisal
If you receive a lower appraisal than expected, a Reconsideration of Value is a way to appeal that decision and request a second look. The buyer or the seller may make a formal request in writing to the lender.
An ROV for a VA loan is a fairly straightforward process that could provide you with a better outcome. VA lenders require an appraisal to ensure the value of the home is at least as much as the amount borrowed to purchase it. This is because the value of the home provides security for the loan. If you default on the loan, the lender must be able to earn enough from its resale to pay back what youve borrowed. Thats why they place so much importance on the appraisal.
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What If The Minimum Property Requirements Are Not Met
If the requirements are not met, then you have the option of fixing them. You can also ask the seller to cover the cost of any repairs. For example, the seller may decide that fixing a bad roof is worth doing since most buyers will request it. Once you correct the issues, you can then have the house reinspected to get your loan approved.
Question : Can I Order A Va Appraisal Myself
- ANSWER: No. VA appraisals can only be ordered by a VA-approved lender.3. Do VA appraisers know the selling price? Yes. When a VA appraisal is ordered by the lender, they are provided a copy of the executed sales contract. When a buyer and seller go under contract, the contract price sets the market expectation, and the appraisers job is to go behind and ensure that contract price is in line with the current marketplace.
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How To Avoid Va Home Appraisal Issues
VA appraisals arent as complicated as they may seem. There are early signs homebuyers can find to tell if a home will clear an appraisal or not. Here are some tips to find out more about how to avoid VA appraisal issues during the home buying process.
The VA appraisal process doesnt need to be intimidating so dont let it deter you from taking advantage of one of the best mortgage products on the martket.
Please contact our support if you are suspicious of any fraudulent activities or have any questions. If you would like to find more information about your benefits, please visit the Official US Government website for theDepartment of Veteran Affairs or the US Department of Housing and Urban Development.
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Problem : Repairs Ordered
The VA appraiser will hold all properties to a list of Minimum Property Requirements MPRs ensure that all homes purchased with VA loans are safe, structurally sound and hazard-free.
But not all homes meet those criteria. Appraisers will carefully note any deficiencies and list all repairs necessary to bring a home up to VA standards. Those repairs must be completed before a VA loan can be finalized. Whats a buyer to do once repairs have been mandated?
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Va Appraisals Are Mandatory
Youll have a lot of choices to make on your homebuying quest. But if youre using a VA loan, you cant choose to opt out of the VA appraisal.
Every home purchased with a VA loan must be evaluated by a VA-certified appraiser. Your VA lender requests and schedules the appraisal, and informs you once the appraisal report is complete.
How Do I Check The Status Of The Appraisal
The only way to check the status of the VA appraisal process and the final report is to check with your lender. Your VA lender will receive a copy of the report usually electronically as soon as a Staff Appraisal Reviewer has reviewed it. Your lender should let you know when the appraisal is ready for you to review and can send you a copy electronically, in person, or by mail.
If it has been more than 10 business days since the appraisal has been ordered and you still havent heard anything, you can check with your lender.
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So Whats With The Va Appraisal Anyway
A VA appraisal is central to the VA lending process. They are a huge protection for VA borrowers. How does the VA know if a home meets its standards? How does the VA protect borrowers? Through the VA appraisal process.
Although some conventional loans allow AVMs Automated Valuation Models VA doesnt as of yet allow it. But thats not a bad thing.
AVMs use artificial intelligence and big data to determine a home price. But no one enters the property.
While AVMs can be valuable in some situations that is not always the case. Imagine the AVM report for a property with 86 cats. The existence of those cats does not show up anywhere, but they could be destroying the property. A real-life, human appraiser will certainly take note.
Va Appraisals: Requirements Fees And What To Expect
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When you apply for any type of mortgage to buy a home, the lender will usually require an appraisal to estimate the home’s value. The same goes for a VA loan, except the lender will hire a VA-approved appraiser. Here’s what a VA appraisal entails and how much it will cost.
» MORE:How VA loans work and who qualifies
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Can The Buyer Be Present At The Appraisal
Yes. Nothing states that the VA buyer, seller, and even real estate agent, cannot be present at the time of the appraisal. However, the seller may want to be present or may not allow the buyer access to the property. Generally, appraisers wont discuss their findings with you even if you are present, so being there may not help you find out anything sooner. Regardless of whether youre present for the appraisal, youll still get a full copy of the appraisal report when its ready.
How Clever Can Help
Veterans, service members, and their spouses that qualify for VA loans should work with an experienced real estate agent to ensure that they are getting the most out of their loan to buy their dream home. A real estate agent will work to provide answers to any questions that home buyers may have.
Buyers who work with Clever Partner Agents can look forward to Clever Cash Back after closing. Eligible buyers can get 0.5% of the purchase price back when they buy a home over $150,000.
If you are interested in working with a Clever Partner Agent, fill out our online form to get connected with one today.
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The Importance Of Appraisals
If youre like most home buyers, then you wont be paying cash for a home. Instead, youll be getting a mortgage.
There are tons of steps to getting a home loan, and the home appraisal is one of most crucial components of the process.
Whether you are buying or selling a home, appraisals exist for good reason.
A home appraisal is an impartial professional opinion of how much a home is worth. Without an appraisal, buyers and sellers wouldnt have an unbiased evaluation of their homes value and neither side would know what price to negotiate.
In a purchase and sale transaction, an appraisal is used to let the lender know that the contracted sales price is supported.
For refinances, appraisals assure the lender that their collateral used for the loan is worth the necessary amount.
Terribly Low Va Appraisal Vs Independent Appraisal
- Milwaukee, WI
Hey everyone! First & foremost I’d like to thank BiggerPockets & all the members on this site for the plethora of knowledge & wisdom I’ve dove into the past couple years & utilized in my real estate endeavors. So thank you!Here is kind of a brief rundown of the current situation: I flipped a home recently in a nice neighborhood in Ottawa, IL. Upon nearing completion, I had it appraised since I was kind of sweating about the value of the home & let others get into my head about list price/value of property. It appraised out for 198k which I thought was fantastic, so I listed the home for 199,900. Eventually I found a buyer & had it under contract for 185k with me paying closing costs. The buyer is utilizing a VA loan, therefore the inspection & appraisal were completed by a VA appraiser. It was to my surprise that the appraisal came back at 150k which in my mind is astounding/borderline incompetent. Now I’m kind of in limbo trying to figure out what to do. I’ve spoken with other successful real estate investors in the area/brokerage owners & they all say that particular appraiser is a “power freak that loves killing deals”. I’ve also spoken to a mortgage broker friend that called the VA association and they state that VA appraisal is attached to that property for 6 months minimum. I’ve yet to call the buyer’s lender to plead my case or fill out any “Tidewater Initiative” paperwork. Please help! Selling at 150k would net me a sizeable loss.
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What If The Home Is Appraised With A Lower Value
There are times when a homes value comes back low. When this happens, you have several options besides just walking away. You can work with your real estate agent to request that the seller lower their asking price for the property. While they may not always agree to do so, this is often the fastest and easiest way to move forward with the sale.
If you are determined to buy the property, you can also put up your own cash to make up the difference between the asking price and the amount you can get approved for the loan.
If you feel the appraisal was faulty, then you may also be able to seek a Reconsideration of Value. The VA is aware that an appraisal may sometimes be incorrect, and a loan specialist can help you work through the process of having it reviewed.
The appraisal process may leave you feeling anxious about your home purchase, but they tend to go fast. We can also work with you each step of the way to make sure that you know your options if the appraisal reveals that you need to take further action.
Jimmy Vercellino is an experienced Phoenix mortgage lender. He and his team work hard to provide a timely, efficient and excellent home loan process for buyers. As a loan specialist, Jimmy manages the entire process for his clients, making the home buying experience a pleasure instead of filled with stress.
Va Loan Appraisal Process Faqs
What is a VA appraisal?
The VA appraisal is different from a traditional home appraisal for a conventional or FHA loan. Like those loans, the VAs process includes a property valuation. But it also determines whether the home is safe and comfortable.
What are the VAs Minimum Property Requirements?
The VAs Minimum Property Requirements, or MPRs, ensure veterans and active duty servicemembers buy safe and comfortable homes. Most homes that are in good condition will meet MPRs. You can read more about them here.
Are VA loan appraisals tougher?
VA loan appraisals can seem tougher than traditional home appraisals because they include an extra step: making sure the property meets Minimum Property Requirements. But if the home youre buying has been properly maintained, it should pass the appraisal or require only minor changes to gain compliance.
Do VA Loan appraisals come in low?
Its possible for a VA property valuation, which is part of the VA loan appraisal process, to come in lower than expected. If your Notice of Value comes in too low to support the purchase price of the home, your loan may not be large enough to buy the home. Youd need to ask the seller to lower the price or youd need to make a down payment to cover the difference.
What will fail a VA appraisal?
How long does a VA loan appraisal take?
What does a VA appraiser look for?
How long is a VA appraisal good for?
How long after VA appraisal to close?
Who pays for the VA appraisal?
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Theres Data Discrepancy Between The Report And Property
If there were egregious errors that the appraiser had made, you may have grounds to contest the report, says Jacobs. Jacobs stresses the importance of verifying that the appraiser gives proper credit to the characteristics of the home, such as the correct square footage, the number of bedrooms, and any updates.
Seller tip: Review the appraisal report with your agent to suss out any material inconsistencies.
