Understanding the VA Loan Appraisal

One of the requirements of receiving a VA home loan is that you must have an appraisal performed on the property. What does this mean for you? If you are a first-time homebuyer, or if this is your first VA loan, the idea of getting an appraisal can be daunting. But, if you remind yourself that the appraisal process is there to protect you, the buyer, from paying more than fair-market value for your home, then it actually becomes quite painless.

Once you begin the VA loan process, your home loan expert will be able to schedule a VA-approved appraiser for you. The Department of Veterans Affairs handles the scheduling and randomly assigns an appraiser to your property. Because it’s their job to ensure that the home meets minimum property requirements as set by the VA, appraisers must also guarantee that the home is safe and habitable. Typically, the appraisal is requested early into the VA loan process to ensure there will be enough time to address any issues that may result from the appraisal.

And just as the VA has strict requirements for VA loan eligibility, they also have stringent performance rules for appraisers assigned to VA homes. According to the VA Lender’s Handbook, appraisers “should keep up to date on major real estate market conditions and trends in order to properly analyze the location-related information contained in appraisal reports.”
Appraisers must inspect the potential property inside and out. They are also required to select and view the exterior of comparable homes and perform a comparative analysis. Typically, appraisers look for things like structural issues, or any other problems that could impact the purchase of the home. The VA prefers that homes be move-in ready.

Typical issues that arise on appraisal reports include homes without an efficient and acceptable source of heat. 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 – along with windows that have broken or damaged frames and seals can be a huge issue on an appraisal report.

Appraisers must include a location map, building perimeter sketches and photographs of either the sale property or the lot where the new home’s construction is going to take place. They also provide an itemized list of repairs required to be completed in order for the VA loan to be approved. This list also includes any corrections needed in order 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 appraisal report. They cannot delegate these tasks.

An appraisal doesn’t have to be a scary, daunting step in your effort to buy a home. To help streamline the process, make sure your realtor is well versed in VA property guidelines. Having an agent who continues to show you properties that are ultimately ineligible for a VA loan is a waste of your time. It’s also very important to work with an experienced VA lender. Lenders who have dedicated VA loan experience know the ins and outs of every VA regulation and can help guide you through the home buying process with ease. If you follow these two suggestions, while educating yourself on the appraisal process – you’ll be living in your dream home before you know it.

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