Standard appraisals, home inspections, VA inspections, and VA appraisals are terms that are often used interchangeably, but there are important distinctions between these crucial elements of the home buying process.
A conventional appraisal is strictly concerned with determining property value, but a VA appraisal goes one step further. When you apply for a VA purchase loan, an appraisal is required to help protect you from purchasing a property that isn’t safe, sound or sanitary.
A VA appraisal also differs from a home inspection. The VA appraisal checklist follows the VA’s Minimum Property Requirements (MPRs), which evaluate the broad health and safety conditions of the property. A VA appraisal might miss important details that only a home inspector is trained to identify.
Does a VA Loan Require an Inspection?
The VA loan program requires a VA appraisal (often called a VA home inspection), but a standard home inspection is optional. The VA appraisal provides a valuable service, but it doesn’t guarantee that the home is completely free of defects. Being informed about the exact condition of the home you’re purchasing can protect you from costly repairs after closing.
As the buyer, you owe it to yourself to completely examine the property yourself before you commit to your VA mortgage, and a home inspection is an important matter of due diligence. Buyers should strongly consider getting a home inspection, even before moving forward with the VA appraisal process.
VA Appraisal vs VA Inspection
A VA appraiser has two objectives: to establish a fair market value of the property and to ensure it is safe, structurally sound and free of health hazards. However, they’re not obligated or trained to report every potential problem or recommend repairs.
A home inspection is much more thorough than an appraisal. A home inspection is meant to be a complete top-to-bottom evaluation of the property. Home inspectors will enter crawl spaces and attics, and will report more specifically on any defect in a home’s structural, plumbing, electrical and HVAC systems.
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VA Appraisal Checklist
As you’re shopping for homes, you might be wondering: What does a VA home inspection look for? VA appraisers look for compliance with a set of basic health and safety standards set forth by the Department of Veterans Affairs. If you’re considering purchasing a home, you can use the VA appraisal checklist to get an idea of whether or not it will pass muster.
Here are some general questions a VA appraiser will be looking to answer:
- Is the property primarily residential?
- Is there enough space to live, cook and sleep?
- Does the home have clean drinking water, a water heater and working sewage systems?
- Does the home have a heating system capable of warming the interior to 50 degrees Fahrenheit?
- Are the heating, cooling, electric, water and other systems in good working order?
- Is the roof in good enough condition to last for a reasonable amount of time?
What Will Fail a VA Appraisal?
In general, any visible health or safety concerns will pose an issue on a VA appraisal report. You won’t be able to close on a home until these issues are resolved. In some cases, sellers are willing to cover the cost of essential repairs rather than lose the sale.
Some common issues include:
- Insufficient HVAC system
- Pest damage or active infestation
- Roof damage
- Peeling or chipping paint
- Missing staircase handrails
- Broken windows
- Rotting wood
- Water stains
- Exposed wiring and other electrical issues
- Utilities are shut off
You'll need to provide your own input on the condition of the property and make sure it's up to your standards before signing the VA loan agreement. If it's not, you'll need to negotiate further before agreeing to purchase the property. This is where a home inspection can pay for itself.
Home Inspection Checklist
Unlike the VA appraisal, a home loan inspection focuses on a home’s problems areas in a much more granular and detailed process. Home inspectors are professionally trained to evaluate every detail of a home and make recommendations for improvements or highlight potential future issues.
Here are a few of the areas the inspector will examine:
- Structural components
- Basement/crawl space
- Central air conditioning system
- Electrical systems
A final home inspection report can often reveal many existing and potential issues a VA appraisal may overlook.
By getting a VA home appraisal and a home inspection, you’ll ensure that you have a complete picture of the condition of your future home before closing.