‘What will fail a VA appraisal?’ is a common concern that we have seen our customers worry about a lot. Instead of worrying about the problems, it’s more important you look for solutions.
We live in an imperfect world; hence, buying your dream home isn’t free of troubles. You will have to make major decisions if the VA appraisal value is lower than the purchase price or if repairs are necessary.
So here we have documented two major challenges that veteran home buyers often go through and have proposed solutions to these.
The VA appraisal value comes lower than purchase price
According to VA appraisal guidelines, your VA loan amount cannot exceed the appraised value of the home. The appraised value also includes any additional costs and fees.
For instance, you agreed to buy your dream home for $300,000 but the appraised value comes low at $170,000. You’ll land into trouble as this is not supported by the VA appraisal guideline.
You may take the following steps when your appraisal value comes low than your purchase price:
Talk to your seller: If the appraisal value is lesser than what you have agreed to pay then ask your seller to reduce the price. It would be a wise decision to make on your part.
Often buyers make up for the difference in value out of their pocket. Don’t do this. The home may not be worth such an investment.
Get Reconsideration of Value: The VA appraiser’s report isn’t the final say on your property. The VA acknowledges that the appraiser may make a faulty assessment. So, buyers are allowed to file ROV or reconsideration of value.
The ROV means that the parties do not agree with the appraiser’s value and are seeking reconsideration. Whatever your case may be there are dos and don’ts of filing an ROV and should be carefully done.
Drop the deal:
VA Loan is a specialized program hence it comes with a unique appraisal contingency known as the VA Amendment to Contract. This contract is signed by both the buyer and seller and it’s there to protect the veteran’s interest. If the VA appraisal value is lower than the purchase price value then you can drop the deal without further ado.
VA appraisal value comes higher than purchase price
You are in a profitable situation. When appraisal value comes higher than purchase price it means that you are paying the seller less than the home’s market value. Moreover, the VA home loan program gives you an added advantage on this. The mortgage amount stays the same so you will be paying only the agreed price. This is because the seller can’t increase the price to meet the appraisal value.
Repairs are necessary to meet MPRs
Home repairs could be avoidable if you choose properties that are in good condition. Otherwise, the appraiser may inspect damages and report them in the VA appraisal inspection.
VA appraisal process is set to ensure that veterans are buying homes that are safe and sound. If the VA appraiser expresses his concerns about the MRPs then you should take them seriously.
Take the following steps when the VA appraiser has reported repairs to meet MRPs:
Talk to your seller:
The first thing to remember is that sellers are not obliged to make repairs by the law. You can still ask them to complete the repairs before selling out the property to you. They may agree to complete the repairs at their own expense if selling the home is their topmost priority.
Do it yourself:
According to the VA appraisal guidelines the buyer is allowed to pay for the repairs if it is needed. However, many lenders’ policies may not support this. Some lenders may not know that you can do it.
If the property has minor damages and there’s no money constraint then it may not be a big deal. However, you should not complete the repairs when the damages are serious or big.
Drop the deal:
As we have mentioned before, you can drop the deal under the VA Amendment to Contract. It is better to walk away than getting stuck with a property in bad condition. So, cancel the deal if the VA appraiser reports serious issues like a collapsing foundation or disordered plumbing
Our Advice to Veteran Buyers:
You are buying your dream home so never make compromises on it. Talk to a VA Home specialized lender about what to expect and the best procedures to follow.
Your loan officer must be able to guide you in the right direction if there’s an issue with the appraisal value or repairs. Contact the best lender near you today
Still, got questions? Comment below and our experts will get back to you.