One of the requirements for being approved for a VA loan is a property appraisal. If you don’t know what an appraisal is, how it works or what this process means for you, read on.
What Is A VA Loan Appraisal?
A VA appraisal is an appraisal performed by someone certified through the U.S. Department of Veterans Affairs (VA). It’s a valuation of how much the home you’re trying to buy or refinance is actually worth. This value is established by inspecting the house and comparing the asking price to recent sales prices for similar properties in the area.
The appraisal is important to your VA loan process for three main reasons:
- You want to make sure you’re not overpaying for a home.
- Your lender cannot loan more than the home is worth.
- The appraisal ensures that the home meets the VA’s minimum property requirements, which involves checking for basic safety and livability.
VA Appraisal Fees
It’s hard to say for sure how much an appraisal will cost, because that depends on where you live and the characteristics of the property. If the appraiser must travel further to get there or has to inspect multiple units, it could cost you more. You can pay for this or negotiate with the seller to pay as part of a package of seller concessions.
You can find maximum fees for your state and county on the VA website. As of April 1, 2019, maximum appraisal fees for single-family homes range from $425 to $1,000 across all 50 states.
VA Appraisal Checklist: Minimum Property Requirements
Just as the VA has certain requirements for loan eligibility, it also has VA-specific rules for its appraisers. Just as with traditional, non-VA appraisals, VA appraisers must inspect the property inside and out. They’re also required to select comparable homes, view the exterior of them and perform a comparative analysis. Typically, appraisers look for things like structural issues or any other problems that could impact a home purchase. The VA prefers that homes be move-in ready.
Each appraised home needs to meet a series of standards known as minimum property requirements (MPRs). You can view the full list online, but we’ve outlined the major requirements below.
Your VA appraiser will check the property to ensure that there is sufficient space in your prospective home to perform normal day-to-day functions. Specifically, there should be safe and adequate room for food preparation, bathrooms and sleeping quarters.
Access And Encroachments
The property needs to have a safe means of access to the backyard and from the street. Private streets should be maintained in accordance with some form of homeowners agreement that will not place an undue burden for maintaining the road on you. The appraiser will note any encroachments of your property onto a neighbor’s and vice versa.
Your appraiser will inspect the property to ensure there is no existing damage due to or imminent danger from natural hazards like flooding, mudslides, avalanches and sinkholes. They’ll also check for other hazards like lead-based paint, radon gas and environmental contamination.
Typical issues that appraisers report include homes without an efficient and acceptable heat source. A heating system must maintain a minimum temperature of 50 degrees in the plumbing areas of the home. There must be adequate and code-approved electrical systems with all the proper fixtures. A leaky roof – or a roof that has problems – and windows that have broken or damaged frames and seals can be huge issues on an appraisal report.
Appraisers also check the roof, attic, crawl space and basements for signs of water damage or other obvious structural problems. There are a few additional requirements for manufactured and modular homes to ensure they meet all state and local standards to be classified as real estate.
One big thing that’s unique to VA loans is a pest inspection, during which an inspector will check for insects that eat into wood, such as termites.
In many states, the seller is required to pay for this inspection. In certain states, the veteran can make this payment. If expenses are an issue for the seller, offering to pay for the inspection could help get your offer accepted.
The VA requires that pest inspections be done in all but these 11 states: Alaska, Colorado, Idaho, Maine, Minnesota, Montana, North Dakota, Oregon, South Dakota, Wisconsin and Wyoming. In certain states, inspections are only required in certain counties.
VA Home Appraisal Process
Now that you know what a VA appraisal looks for, let’s look at what you can expect from the process itself.
Once you begin the VA loan process, your Home Loan Expert will be able to schedule a VA-approved appraiser for you. The VA handles the scheduling and randomly assigns an appraiser to your property. Typically, the appraisal is requested early in the VA loan process to ensure enough time to address any issues found during the appraisal.
Along with fees, the VA sets standards with regard to how long the turnaround for an appraisal can be. This varies state by state. Across the U.S., appraisers have between 5 and 21 business days to complete their reports. Be aware that this doesn’t necessarily mean the whole process will be over in under 3 weeks. If you need repairs, the process could take quite a bit longer.
Appraisers must include a location map, building perimeter sketches and photographs of either the sale property or the lot where a new home’s construction will take place. They also provide an itemized list of repairs to be completed for VA loan approval. This list also includes any corrections needed to make the property conform to regulations set by the Department of Veterans Affairs. Then, they must personally make the final value estimate and sign their name to the report. The VA will then review the appraisal report and issue a Notice of Value.
It’s important to note that your VA appraisal does not cover the same ground as a home inspection. Regardless of your loan type, a home inspection and appraisal are different parts of the home buying process.
While there are some basic checks in place during this process to ensure safety and livability, you should still consider getting a home inspection before finalizing your purchase to ensure you have a thorough understanding of everything your home has in store for you.
How To Handle Problems With Your VA Appraisal
There are a few things that can go wrong with a VA appraisal that might complicate the home buying process. Being prepared can help you deal with these issues if they arise.
The Property Doesn’t Meet MPRs
If your appraiser determines that the property doesn’t meet minimum property requirements and needs repairs, you’ll need to get those taken care of before you secure your VA loan. Ideally, the seller will agree to pay for these repairs, but they aren’t obligated to do so. If they refuse, you can either pay for them yourself or walk away from the property.
Make sure you consult your real estate agent and lender to discuss your options. It can be difficult to weigh the pros and cons in this situation if you’re not a VA loan expert.
The Appraisal Is Lower Than Expected
The appraisal sets a ceiling on how much you can borrow with your VA loan. If the appraised value of the home is less than the sales price, you might not have the funding to cover the purchase.
You have the option of covering the deficit in cash, but that isn’t a realistic option for many home buyers. If that’s the case for you, too, you’ll have to negotiate with the seller, ask the VA to reconsider its appraisal or, unfortunately, walk away from the property.
A low appraisal can be a tough situation to navigate, so make sure you speak with your real estate agent and lender to determine what the best course of action is.
The Bottom Line: The Right Team Can Make For A Smoother Appraisal
An appraisal doesn’t have to be a daunting step in your effort to buy a home. Learning more about the process is a great start, but it also helps to have the right team to back you up when things get complicated.
Make sure your real estate agent and lender are both well versed in VA property guidelines. Having an agent who shows you properties that are ultimately ineligible for a VA loan is a waste of your time, and lenders who have dedicated VA loan experience can help guide you through the homebuying process with ease.
Ready to assemble your team? You can find a qualified agent at Rocket Homes® 1,2 or, if you’re ready to get started on your loan, you can apply online with Rocket Mortgage® to explore your VA mortgage options.
1 Rocket Homes® is a registered trademark licensed to Rocket Homes Real Estate LLC. The Rocket Homes® Logo is a service mark licensed to Rocket Homes Real Estate LLC. Rocket Homes Real Estate LLC fully supports the principles of the Fair Housing Act. For Rocket Homes Real Estate LLC license numbers, visit RocketHomes.com/license-numbers. California DRE #01804478
2 Quicken Loans, LLC (doing business as Rocket Mortgage) and Rocket Homes Real Estate LLC are separate operating subsidiaries of Rocket Companies, Inc. (NYSE: RKT). Each company is a separate legal entity operated and managed through its own management and governance structure as required by its state of incorporation, and applicable legal and regulatory requirements.
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