Buying a home using a VA loan is an extensive process that requires you to partake in multiple processes. One of the first processes that your lender will go through is that of ordering a VA appraisal on your property.
What Is a VA Appraisal?
The VA appraisal is a traditional method of property valuation. The VA appraisal is believed to be an authentic and reliable assessment because it is performed by an independent VA appraiser.
The independent appraiser consider multiple factors and eventually issues a report that determines the property’s value, and whether the Department of Veteran’s Affairs will even guarantee the loan.
VA appraisals are mandatory for every VA purchase loan. While this seems a bit over the top, it’s because the government is guaranteeing a loan, and they need to hedge their downside.
Establishing an Appraised Value
The first purpose of the VA appraisal is to establish a fair market value for the property. The appraiser does this by comparing your home to at least 3 other properties similar in age, location, and size. This price is then adjusted up or down depending on whether of not your house has the same features.
Once the appraisal is done, the lender will finance either the appraised or purchase price of the home, whichever is lower. If your home is unique, it can be hard to determine a value as finding similar homes is difficult. In this case, the appraiser will find the “next best thing” and his appraisal will be conservative.
VA Appraisals vs Inspections
Some buyers think the VA appraisal and home inspection are the same thing. However, there is a big difference between the two. The point of the appraisal is to ensure the home is both worth the price you are claiming and that it meets the VA lending guidelines. These guidelines include minimum property condition standards.
A home inspector is looking for many of the same things, but an independent home inspection is typically more in-depth than that done by the VA appraiser. After all, the point of a home inspection is to ensure it’s safe, free from defects, and anything that could cause a problem in the future is noted.
During this process, the inspector dives deep into the property’s structure and systems. He’ll inspect the foundation, plumbing, electrical system, roof, and more.
On the contrary, the minimum property requirements (the items an appraiser looks for) are a standard set of easily identifiable things common to most homes. Because a home inspection is more detailed than the VA appraisal, it’s a good idea to have the home inspected before requesting an appraisal.
This is because if you fail the appraisal, you’ll have to pay for a reinspection. However, if you find and address any potential issues before the appraisal, you have a better chance of passing and will avoid the need to pay for multiple inspections.
Read on to learn what an appraiser is looking for; you’ll see that the requirements are basic, so a smart buyer will also get an independent home inspection.
Minimum Property Requirements
The VA has certain concerns that it looks to find out throughout the course of its appraisal. One of the chief motives behind the appraisal is to meet sure that all homes are safe, meet minimum value requirements, and are structurally sound.
The VA appraiser does this by referencing the Minimum Property Requirements. All concerns within the home would be mentioned within the appraisal report.
Specific action would be taken to ensure that the home is in line with these minimum standards. Homes that meet these Minimum Property Requirements guidelines would only be approved for eventual financing.
Understanding the Minimum Property Requirements
Appraisers from the VA take every single thing from within the property into account before giving it an approval rating or setting the price for it. All factors, including the interior and exterior, are taken into consideration before the VA value is given.
While we have discussed the Minimum Property Requirements that a VA appraiser will look to find inside a home, it is best to look at the details pertaining to it more closely.
If a home doesn’t meet certain MPRs, the appraiser will leave a detailed note as to what a home needs to meet these requirements. The VA doesn’t run a home inspection service which is why they cannot promise for the home to be free of defects whatsoever.
While MPRs have a given purpose within any property, they can be a bit too hard to understand for some novice sellers and buyers. Lack of proper information can lead to frustration down the line.
This is why you should have sufficient understanding of MPRs before starting the house hunt. Appraisers look at the following items when conducting their walk through:
Adequate Living Space
The property that you are getting a VA appraisal for should possess enough living space, inside of it. By enough living space, we meant enough space for sleeping, cooking, and living.
Residential Properties Only
All kinds of storefronts and commercial office buildings are out of the question when it comes to VA financing. Only residential properties are allowed to be financed using a VA loan.
Adequate Heating and Cooling
The heating and cooling system within the home should be at par with the standard that is set around different homes. The heating system must have the capabilities to constantly keep the room temperature above 50 degrees Fahrenheit.
Finally, your VA appraiser will look at the structure of the home, including the roofing. If it’s worn, old, or looks to be in rough shape, they will require it to be addressed prior to issuing a loan.
Usable Electrical and Plumbing Systems
The electrical and plumbing system in your VA financed home should be usable and safe. Minor electrical glitches don’t matter much, as they can spring up anytime and anywhere. However, anything major like short circuit issues or any other problem of this kind should best be avoided.
Availability of Water
Your VA appraiser will take a nice, good look at the water supply and make sure that there is an adequate stream of water available inside the home. Your home must be connected to the public water supply and the water supply should meet current standards.
VA Appraisal Costs
As I’m sure you expect, your appraisal is not free. While the fee schedule varies by state, it’s typically between $500 and $800. This fee seems to vary based on VA appraiser’s travel time. In bigger cities, the fee is lower because there is more manpower to complete the inspections.
The turnaround time also varies, but it typically between 10 and 15 days. We’ve included a list of common appraisal costs in some of the most popular states ranging from Iowa to California.
- Illinois: $450
- Iowa: $450
- Kansas Metro: $450
- Rural Kansas: $500
- Metro Minnesota: $550
- Rural Minnesota: $450
- Nebraska: $475
- Rural Nebraska: $525
- North Dakota Metro: $525
- Rural North Dakota: $675
- South Dakota Metro: $500
- Rural South Dakota: $575
- Wisconsin: $450
- Arizona: $600
- California: $600
- Hawaii: $675
- Nevada: $600
- New Mexico: $600
- Alaska: $800
- Colorado: $750
- Idaho: $600
- Rural Montana: $900
- Montana Metro: $800
- Oregon: $800
- Utah: $600
- Washington: $800
- Wyoming: $600
- Alabama: $500
- Florida: $500
- Mississippi: $500
- Puerto Rico: $500
- Virgin Islands: $675
- Connecticut: $525
- Delaware: $550
- Indiana: $525
- Maine: $675
- Massachusetts: $525
- Michigan: $525
- UP Michigan: $600
- New Hampshire: $550
- Ohio: $525
- New Jersey: $525
- New York: $525
- Philadelphia: $525
- Rhode Island: $525
- Vermont: $650
Should You Worry about Failing a VA Appraisal?
As we’ve discussed, the list of things checked in a VA appraisal are straight forward. Additionally, a third party home inspection will likely catch anything that will cause you to fail the appraisal. This will save you time and money, and gives you the best chance of being approved for a VA loan.
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VA Home Loans: A complete guide to VA Home loans. Everything you need to know!