VA appraisals are a type of home appraisal performed by a licensed Appraiser. They're very similar to a standard real estate appraisal report you'd expect to see on a Conventional Home Loan or FHA Home Loan. To be eligible to perform a VA Appraisal, a licensed appraiser is required to obtain a special certification, over and above their normal licensing requirements, from the VA and must remain in good standing with the VA at all times. To be VA-certified, an appraiser must be FHA-certified, and demonstrate a minimum of 5 years of geographic competency in a given real estate marketplace. A VA appraisal can only be used for a VA Home Loan, and can only be ordered by a VA-approved lender. Generally-speaking, VA certified appraisers are some of the most highly-qualified appraisers in the industry.
There are TWO major parts of a VA appraisal:
1) The Market Analysis is essentially identical to that of a Conventional or FHA appraisal, meaning that the VA appraiser looks to see that the value of the home is in-line with comparable real estate sales of similar homes near the home, that generally have sold within the most recent 12 months. This ensures that the Veteran is not overpaying for the home.
2) The Condition Assessment of the home is exactly what it sounds like: the appraiser checks out the condition of the home, takes photos and measurements, and looks for obvious signs of damage or deferred maintenance. There is little difference in this approach vs a Conventional of FHA appraisal, and yet, this is the most misunderstood part about the VA appraisal. The misconception is that it's extremely critical of the conditional of the home, which it's not.
In fact, a typical Home Inspector's report (which is always recommended by nearly every experienced Realtor, for instance) is much more critical of a home's condition than any VA appraisal report, so there's nothing to be concerned about. A licensed home inspector can stay at the home for 3-4 hours, but the typical VA appraiser visits a home for about 1 hour.
Overall, a VA appraisal report is there to ensure that the Veteran is buying a home that is priced properly with the marketplace, is in sound condition, ready to live in, and free of obvious damage or deferred maintenance issues.
Okay, that covers the basics. Onto the questions!
With respect to the Market Value, they look to make sure that the home price is in line with recently sold comparable homes within a 1 -2 mile radius, that have sold within the most recent year.
With respect to the condition of the home, a VA appraiser typically looks for the following items. Most of these issues are not unique to VA appraisals.
We hope you found this helpful! As always, if you’re looking to purchase, refinance or get preapproved to purchase a home anywhere in the state of Florida, we’d love to help. Simply give us a call so we run some numbers for you and answer all your questions!
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Yours in successful homeownership,
Unconventional Lending Program Director