VA Loan Articles
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VA Appraisals--What's Involved?
What does a property need in the way of a VA appraisal before it can be successfully considered? Many first time homebuyers are nervous about the appraisal process—what if that dream home doesn’t pass the inspection? Do a few defects automatically disqualify a home from being considered for a VA loan?
In many cases the answer isn’t as clear as "yes" or "no". In some instances the VA appointed appraiser will spot defects which are noted for correction—these don’t knock the property out of the running for a VA loan, they must simply be corrected. More on that in a moment.
Some of the burden falls on the appraisers themselves. For example, the VA has a strict "no accommodation" clause that forbids non-standard practices that "accommodate" the sale price of the property. Appraisers are required to review the property and report the actual appraised value, even if it doesn’t conform to the sale price of the home. Appraisers are also expected to do specific tasks personally.
In order for a VA-approved appraisal to have taken place, the appraiser must inspect the property inside and out. They must also personally select and view the exterior of each comparable and perform the analysis. VA appraisers are also required to personally make the final value estimate and sign their name to the appraisal report. None of these tasks may be delegated.
There are exceptions and modifications to these guidelines—for example, a VA property appraiser looking at a proposed construction site obviously can’t view a finished home If a VA assigned appraiser needed what the Department of Veterans Affairs calls "significant professional assistance" when doing the appraisal or when preparing the final report (where permitted), the appraiser must list the professional helper by name AND list all tasks performed by the third party.
VA assigned appraisers must include a location map in the report, building perimeter sketches and photographs of either the sale property or the lot where proposed construction is to take place.
For concerned house hunters, one of the most important parts of the appraisal report is an itemized list of items or issues the Department of Veterans Affairs describes as “any observed repairs required to be completed”. The list must also include “customer preference items to be installed”. The report must also include any corrections to the property to make it conform to VA regulations. It’s not all about spotting property defects, those customer-preferred items are just as important to the report.
Corrections can include repairs to leaking roofs, fixing windows that don’t open or close properly, missing handrails for staircases with more than three steps, and other related issues. Does the appraiser spot areas that may require inspections? They too must be noted in the report along with any other supporting information that justifies the appraisal.
The appraisal process isn’t intended to unreasonably raise the bar when it comes to quality in a new or existing house; instead it’s designed to protect both the VA loan borrower and the government’s investment in your dream home.
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