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VA appraisals are required by the Department of Veterans Affairs (VA) and follow a very specific set of guidelines and steps, which are not much different from those of traditional mortgages.
Although the government backs and insures the loans, private lenders actually issue VA mortgages. Before the VA is willing to take on that risk, the agency requires a VA-approved appraiser to determine the fair market value for the property a military member or veteran wishes to buy.
If you want to buy a home using a VA loan, you will first need an official VA appraisal to make sure it’s worth as much as you believe it is. We cover the VA appraisal guidelines for 2019.
- How does a VA appraisal work?
- What does a VA appraiser look for?
- How long does a VA appraisal take?
- How much does a VA appraisal cost?
- What happens if your VA appraisal comes in low?
- How do I dispute a VA appraisal?
How does a VA appraisal work?
The VA appraisal works much the same way a traditional appraisal and follows the same professional standards of impartiality, training and reporting. VA appraisers also use the same form that appraisals for conventional loans use.
Once you’ve decided on the home you wish to buy with a VA loan, your VA lender will be authorized to order an official appraisal of the property. This is a crucial step needed to give the lender certainty that it’s worth the money they’re financing to pay for it.
Chances are that you will not interact with your VA appraiser. But this person will visit the home you’re planning to buy and spend time examining it and the neighborhood around it. They will note the size, location and features of the home you’re buying and find comparable sales to determine the value.
There is one difference that can be important: The VA appraiser will also determine whether there are any urgently needed repairs to bring the property up to standard with the VA’s minimum property requirements. These generally include provisions that a home be safe and healthy for its residents.
What does a VA appraiser look for?
The VA appraiser will work through a form called the “Uniform Residential Appraisal Report.” It’s the same form used in conventional loan appraisals for Fannie Mae and Freddie Mac.
VA appraisers use what is known as a “sales comparison” approach to valuing properties. This means that they look at recent sales of similar homes to gauge the market value of the property they’re evaluating.
Appraisers will carefully examine the exterior and interior of the home and take notes about different aspects of its construction. These include:
- Year built
- Number of stories
- Number of bedrooms and bathrooms
- Square footage
- Type of foundation
- Roofing materials
- Floor and wall materials
- Basement and attic features
- Car storage
The appraiser must also review the neighborhood. The appraiser will note whether:
- It’s urban, suburban or rural
- Property values have been increasing or declining
- There’s a housing shortage or surplus
- Homes are selling quickly or slowly
With all this in mind, the appraiser will select three homes recently sold in the area that are similar in size and features to the target property. These sales typically dictate the range of prices the target home should sell for. The appraiser will make adjustments based on any differences between the comparable home sales and the home in question.
For the final report, the VA appraiser will also take photographs of the property and include a floorplan of the home’s features.
How long does a VA appraisal take?
In general, expect a VA appraisal to take a week or two from start to finish.
There are strict requirements for how quickly VA appraisals must be finalized. The VA says that its appraisals cannot take any longer than appraisals on conventional loans. VA appraisers are supposed to set up an appointment within two days of receiving the request.
Each state sets its own guidelines for how long appraisers have to complete their work. In most parts of the country, the limit is between five and 10 business days. However, longer times are found in several states, from 15 days in the Dakotas to 28 days in Montana.
How much does a VA appraisal cost?
In most parts of the country, a VA appraisal will cost between $425 and $650 for a single-family home. Appraisal fees vary by state and sometimes even by county within a state. Costs tend to be higher in the Rocky Mountain region, where they run around $700 to $900. You can find out how much VA appraisals cost in your state on the VA website.
Appraisals on homes with between two and four units typically cost a bit more — between $600 and $1,200, depending on your state.
What happens if your VA appraisal comes in low?
A servicemember or veteran can be denied a VA loan if the appraised value isn’t as high as the proposed sales price. That’s because the lender wants to make sure that if you are not able to pay your mortgage, it will be able to get their money back by selling the property.
However, if the borrower doesn’t feel the appraisal was high enough, they can dispute the valuation.
How do I dispute a VA appraisal?
To dispute the appraisal, you’ll need to state in writing the rationale for why you disagree with the initial appraised value and provide supporting evidence through recent sales data. You also need to specify the value you believe the home should have.
Valuation disputes are handled by the VA Regional Loan Center that oversees the borrower’s area. This “reconsideration of value” process is not guaranteed to result in a new value, the VA warns. But it is allowed to take into consideration more market data than was used in the initial appraisal.
You will not send this information to the appraiser. Instead, you will send this written documentation to your lender, who will send it to the VA. Any request seeking a change of more than 10% to the value will require another visit to the property.