A home appraisal can be the most stressful aspect of purchasing a home. After finding the perfect home and signing a contract, the appraiser must ensure the property meets a lender’s guidelines. Will the home’s appraisal value meet or exceed the loan amount? Are there hidden problems that will render the home un-financeable?
But the appraisal process doesn’t have to be grueling. In fact, with the right team and knowledge base, the VA appraisal can be a helpful, information-gathering step for prospective buyers. To help yourself get through the appraisal process unscathed, take the following tips to mind:
Find a VA Knowledgeable Agent
Not all real estate agents are created equal. Nearly every agent specializes in a certain area, neighborhood, or housing type. Of special interest to military buyers are agents who specialize in VA purchases. These “military-friendly” agents can help military buyers weed out properties that won’t meet the VA’s “Minimum Property Requirements”, or “MPRs.” To find a military-friendly agent, check with fellow VA buyers, or do a local online search for “military-friendly real estate agents”.
Work with a VA Loan Specialist
Don’t choose just any lender to handle your VA loan. Even if a popular mortgage lender in your area is VA-approved, that doesn’t mean its loan officers are well-versed in VA loans. The VA loan program has several unique restrictions, and you don’t want to entrust your purchase to a VA rookie. Choose a lender with substantial VA home loan experience.
Know the VA Appraisal Guidelines
Working with a military-friendly agent is an excellent way to ensure your home will meet VA MPRs. But you shouldn’t expect your agent to do all the work for you.
As a military buyer, you also need to be aware of the VA’s property guidelines. Those guidelines exist for the protection of service members, and require that a home be move-in ready and structurally sound.
A good understanding of VA guidelines will help you identify the type of home you’ll be able to purchase. VA home loans can be used to purchase any of the following property types:
- New or existing single-family home
- Condo or townhouse in an “approved” development
- Manufactured home
- Modular home
Each property must also meet specific criteria defined by the VA. Those criteria include:
- Electrical and plumbing systems must be safe and have “reasonable future utility”
- Heating system must be capable of maintaining the home at 50 degrees Fahrenheit
- Water quality must meet local standards
- Roofing must be adequate
- Properties must have safe access from the street
- Basements and crawl spaces must be dry
- Home must be termite, dry-rot and fungus free
- Lead-based paint must be corrected
With a solid knowledge base of VA appraisal criteria, buyers can more easily filter through available properties. That understanding makes for a more efficient (and less frustrating) house hunt.
Know Your Home
The VA appraiser is on the lookout for issues that could compromise your home’s safety, sanitation, and structure. They’ll also ensure the home’s mechanical systems, potable water supply, domestic hot water, and sewage disposal systems are up-to-code and in decent repair. Should any of these systems be compromised, you can bet the VA appraiser will make the purchase “subject to repair.”
To prevent getting blindsided by the VA appraisal report, learn as much about the home as possible. Carefully study the seller’s disclosure statement, get advice from your military-friendly real estate agent, and always purchase a professional home inspection.
Be Prepared for the VA Appraisal Fee
The VA appraisal fee is typically paid by the buyer. Buyers can attempt to persuade the seller to pay the appraisal fee during negotiations, but this isn’t a request that’s commonly granted. So it’s important for buyers to have cash available to pay for the VA appraisal.
The appraisal fee is determined by the VA, and varies by state of purchase and the type of home. Those fees currently range from $350 – $700. To find a list of VA appraisal fees by state, check with the VA’s Home Loan website here.
Be Flexible With Your Timeline
Because the VA appraisal isn’t always as quick as buyers would like, it’s imperative for VA purchasers to maintain “wiggle room” in their closing timelines. The VA issues “timeliness requirements” for its appraisers that vary by state. VA appraisal reports are typically expected back to the lender within those timeliness requirements.
But it’s important for buyers to know that those “requirements” more closely resemble “guidelines.” Delays can (and frequently do) occur. Those delays are more common in rural areas, where the availability of VA-certified appraisers is more limited.
In a conversation with Veterans United Home Loans, National VA Home Loan Program Director Mike Frueh stated that VA appraisals are completed in 10 days on average. It’s a smart idea to build at least an additional 10 days into your closing window to accommodate any potential VA appraisal delays.
Remember: VA Appraisal Does Not Equal Home Inspection
The VA appraiser will ensure a home is safe, sanitary, and structurally sound. And while the VA appraisal is an informative tool for buyers, it’s typically not as thorough as a professional home inspection.
Think “breadth” versus “depth”. The VA appraiser checks the home for a “broad” list of issues, but a professional home inspector typically takes a much “deeper” look at a property. A home inspection report contains detailed photos and repair recommendations for every facet of a property. That includes everything from a chipped floor tile to a clogged gutter to a leaky roof.
A professional home inspection is optional for buyers, but it’s not something a buyer should ever skip. For buyers headed into the biggest purchase of their lives, a home inspection provides extremely valuable data: data that simply isn’t replicated by the VA appraisal.
Don’t Fear the VA Appraisal!
While VA appraisals can certainly be frustrating, potential buyers should actually be thankful that they exist. Professional appraisers provide valuable property information and help you avoid unsafe homes in need of costly repair. Appraisers also ensure you’re paying a fair market value for the home you are interested in.
So don’t fight the VA appraisal process. Appraisers are there to help, and as long as you educate yourself and hire the right professionals, you should get through the appraisal process without any big surprises.
This guest post was written by Jessi Hall, a former real estate broker and investment property manager. She currently writes about real estate, VA loans and homeownership for Veterans United Home Loans. Follow Jessi on Google+ and the Veterans United Realty blog.