The VA Appraisal is part of the process of obtaining VA backed funding for your mortgage. It is paid for by you (the buyer) and costs about $500. In short, it is a thorough look at your potential home’s condition and value that focuses on health and safety. If any aspects of the home are flagged,
you will need to renegotiate the contract to remedy those issues before the funds for your loan will be released.
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Who does the VA Appraisal?
- Functional mechanical systems: Electrical and plumbing systems must be in good repair and have some usable life remaining.
- Adequate heating: The home’s heating system must be safe and adequate and able to maintain a temperature of at least 50 degrees Fahrenheit to prevent pipes from freezing.
- Adequate roofing: The roof must be in good condition and without any major defects.
- Dry basements/crawl spaces: Basement leaks must be corrected for VA approval.
- Free of hazards and defective conditions: A toxic landfill on the property or poor workmanship can eliminate homes from VA contention. Faulty support beams, exposed wires or stairs without proper railings can also be considered hazardous by a VA appraiser.
- No wood-destroying insects: If you live in a pest-prone area, the VA may require a termite inspection. Properties with termite infestations must be treated and reevaluated to garner VA approval.
- No lead-based paint: Properties built before 1978 must be inspected for lead-based paint. Surfaces with cracked or chipped lead-based paint must be scraped and repainted, covered with drywall, or totally removed
Establish Property Value
To establish the value of a property (so, how much the lender should loan towards the purchase), appraisers will look at the sales of three comparable homes to arrive at a fair market value for your property. Then, value is added or subtracted depending on the specific features of your home.
These comparisons are based on:
- VA appraisers must use a “sales comparison” approach rather than a “cost-based” approach in calculating appraisal value. The cost of building or replacing the home has no bearing on the appraisal value.
Only completed sales can be used as comps for the purposes of the VA appraisal. Sales listings, contract offers and unsettled sales don’t qualify.
Comps should reflect a relatively narrow price range. So if you’re buying a $175,000 home, the appraiser should rely on comps that are similarly priced rather than extrapolating from multimillion dollar properties.
Comps should have been sold less than 12 months ago and not less than six months ago.
Comps should be closely located to the appraised property