After you've chosen your perfect home and struck a deal with its owner, then comes time for the appraisal. The VA requires that the property is seen by an appraiser, for reporting the value and to cite any apparent health and safety issues.
Appraisals are not professional home inspections and they don't give you the whole picture. It won't detail how many home repairs are needed in the future. Instead it will find what needs to be done immediately. The guidelines for appraisals are the same across the country. Home appraisals are the VA's confirmation of the home's value compared to the sale.
They do sound as if they're similar, a property inspection and a property appraisal. And yes, different individuals would in fact visit and inspect the property, but for two entirely different purposes. Let's look at its purpose how it affects a VA loan.
Safety, Sanitation, and Structural Integrity!
Appraisals are often described as the most frustrating part of the homebuying process. Yes they can be rigorous, but the requirement intends for the veteran-buyer to get a good deal with their purchase. The VA wants homes to be ‟move-in ready” with minimal work and repair needed. All major repairs or health & safety issues must be resolved before the loan closes.
Minimum Property Requirements (MPR's)
All requirements must be met before the VA guarantees a home loan.
Here are the largest concerns of an appraisal:
- Temperature Control: Heating systems must work and provide residents with comfortable living situation. If there's a fireplace or wood-stove heating, the temperature must be maintained to at least 50 degrees. Cooling systems need to work.
In some regions, a heating system may not be required. That determination needs to be made by the VA and neither the buyer or seller.
- Moisture related issues: Basements should be dry, not flooded. Ceilings cannot have water spots. Gutters need to be intact and free of mildew or pooled water.
- General water issues: Is there a reliable potable water supply? What about adequate sewage disposal? Does the hot water work?
- The exterior has to make the cut. Are the sides of the house showing their age? Roofs cannot have defects. If it's wooden, look for signs of rot, decay, and paint peeling. Common problems also arise with both Vinyl and Stucco materials. Fungus will be reported to the VA.
The electricity in a home could be a concern. Here are some rules regarding the electrical setup in a home:
- Must meet local electrical codes, such as CFCI outlets (with 'test' and 'reset' buttons). For outlets near water sources (kitchens, bathrooms), these should be installed.
- Must be acceptable electricity for lighting
- No smoking fuses or exposed wires.
- VA mandates that mechanical systems must “be safe to operate.”
- Older Fuse Boxes vs. Newer Circuit Breakers: whichever the local building code authority is okay with.
- Appraisers may not be electricians — they focus on safety above other concerns.
In Rural Areas: Appraisers asked to defer National Fire Protection Association's ‟Electrical Code Requirements”
Other grey-areas in their examination of the home will fall back to local building codes.
When something fails the appraisal
Appraisers may request a repair be done or for a professional electrical inspection to be conducted. But, if they don't(!) and you think that you need one: get one! There may be unseen problems which will require your attention in the future. These are your options when encountering a failed appraisal:
- The seller can pay for repairs
- The buyer can pay for repairs (out-of-pocket)
- No deal, keep looking.
"Exemptions" on any MPRs are actually extensions that will need to be corrected after some time. All MPR's must be met or recognized by the VA before the loan can close.
We know Appraisals
We know the VA Loan as well as we do its requirements. There are many things to check over before the loan can be closed. Cornerstone Military Lending is committed to helping our veterans get into a comfortable and safe home. It can help to have a realtor who is versed with VA loans. They might figure out if you can save money on inspecting a house or getting a repair. We can point you to realtors who are experienced with the VA Home Loan.