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The VA Home Loan Appraisal has a bad reputation. Some sellers won’t entertain bids from VA borrowers because they’re afraid of the appraisal, but there’s nothing to be afraid of – it’s just another appraisal.
No matter the type of loan you get, you’ll need an appraisal, so understanding the VA appraisal requirements and seeing how flexible it can be is a great way to get the financing you deserve as a thank you for your time in the service.
What Is a VA Loan Appraisal?
The VA loan appraisal ensures the home you want to buy or refinanceis worth at least as much as you’re borrowing.
Since the home is the loan’s collateral, lenders must know if the home is worth it. If you default on the loan, they will take possession of your home and sell it.
Only VA-approved appraisers can perform a VA loan appraisal because they are trained on VA requirements, including the Minimum Property Requirements.
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VA Appraisal Fees: How Much Does It Cost?
The actual cost of a VA appraisal varies by location, size of the home, and how far the appraiser must travel.
On average, homebuyers pay $375 – $1,000. Each state and county has maximum amounts VA appraisers can charge, so ask your lender what those limits are if you aren’t sure.
VA Loan Appraisal Checklist
The VA loan appraisal isn’t much different than an appraisal for any other loan except for their Minimum Property Requirements. They sound tedious, but most government home loan programs/lenders require the same thing.
Overall, the VA loan appraisal must show that the home is safe, sound, and sanitary.
- No Hazards: The appraiser must assess any immediate threats to the property, such as flooding, sinkholes, or avalanches. Appraisers also look for hazards inside the house, like lead paint or radon.
- Water Availability: The property must have year-round access to clean water, a hot water heater, and sanitary/safe sewage. The property can have a private well, but it must meet local and federal guidelines.
- Roofing: The roof must be in good, stable condition and have at least 3 to 5 years of life left on it. There can’t be any damage, holes, or other risks that would put the roof and home at risk in the foreseeable future.
- Basements: Basements must be sanitary and safe. They must be free of pooling water or dampness. They must also be clutter-free with no signs of cracks, especially in the foundation.
- Mechanical Systems: All mechanical systems must be in good condition and have at least a few years of life left. All systems must be safe and up to local code.
- Electricity: Like mechanical systems, all electrical systems must be up to code, safe, and running properly. The systems shouldn’t show signs of wear and tear or risk failure within the next couple of years.
- Utilities: All utilities must be in good working condition with adequate life left on them.
- Defective Conditions: Any defective conditions resulting from poor construction could pose a problem unless the issues are minor and easily fixed.
- Heating: The home must have adequate heat throughout the entire home, reaching temperatures of at least 50 degrees.
- Pest Inspection: The appraiser or a pest inspector must ensure the home is free from any pest infestation and isn’t at risk of such infestation in the future.
>> More: How to Choose the Best Mortgage
How the VA Home Appraisal Process Works
There isn’t much you have to do as the buyer to get a VA home appraisal. Once you are working with a lender and find a house, they’ll handle the process, which includes:
The appraiser will schedule the inspection with the seller. The appraiser needs access to the interior and exterior of the home.
They will take measurements, jot down notes about the property and take pictures. It usually takes about an hour.
VA Appraisal Timeline
The appraisal can slow down the VA loan process, so most lenders try to complete it within a week or two.
The VA has guidelines that the appraisal cannot take longer than 21 days, but most appraisers work much faster since they know the appraisal can hold up the loan process.
Appraisers must submit several documents to the VA to get the VA Notice of Value. These include:
- Photographs of the interior and exterior of the home
- Photographs of the comparable sales in the area (homes that sold within the last six months)
- Location map
- Building sketches
The appraiser must also submit notes regarding the home’s condition and any necessary repairs the home needs before the VA can approve the loan.
The appraiser makes their value recommendation and sends it off to the VA for their approval.
VA Appraisal vs. Home Inspection
Please note that a VA appraisal is NOT a home inspection. The appraiser will note wrong things that don’t pass the VA guidelines, but they don’t give the home the same once-over that inspectors do.
VA loans don’t require a home inspection, but it’s always a good idea so you know what’s wrong with the home and to make sure you’re making a good investment decision.
What Happens if the VA Appraisal is Low?
If the VA appraisal is low, you have three options:
- Re-negotiate the sales price with the seller. If the appraiser thinks the home is worth less than you offered, ask the seller to meet the appraised value or meet halfway.
- Walk away from the sale. If the seller doesn’t agree to lower the price, you may want to find another home rather than invest more money in a home than it’s worth.
- Pay the difference in cash. You have the option to make a down payment equal to the difference between the appraised value and loan amount. This can get costly and isn’t always the best decision, though.
What Happens if Home Repairs Are Necessary?
If the appraiser found necessary repairs, you have two options:
- Ask the seller to do them and pay for them. Most sellers will fix the issues since they should have fixed them before they listed the home anyway. If they won’t, they may be willing to give you credit to cover the costs at the closing.
- You pay for the repairs yourself. If you want the home badly and the costs aren’t tremendous, you may consider paying for the repairs, knowing that you’ll make the money back in the home’s appreciation.
Are VA Loan Appraisals Tougher?
VA appraisal guidelines may seem tougher or even annoying, but they protect you, the buyer. If you were to buy a home that wasn’t safe, sound, and sanitary, you wouldn’t be happy, right? The Minimum Property Guidelines the VA sets ensure you are getting a home that’s immediately livable, safe, and won’t have any major issues for the time being.
Bottom Line: VA Loan Appraisals
No matter the type of loan you get, you’ll need an appraisal.
The VA loan appraisal has a bad reputation because it has a few more requirements, and it may take a little longer, but most lenders have it down to a science today. Don’t let the VA appraisal deter you from getting the VA financing you need.