VA Loan Appraisal Checklist

When applying for a VA loan, a key component of the process is the appraisal. The VA loan appraisal is crucial as it ensures the property meets specific standards and provides value for the loan amount. Here’s a comprehensive checklist to help you understand and prepare for a VA loan appraisal.

1. Understanding the VA Appraisal Process

The VA appraisal is not the same as a home inspection. While it does assess the value of the property, its primary purpose is to ensure the property meets the Minimum Property Requirements (MPRs) set by the Department of Veterans Affairs. The appraiser will check for any issues that could affect the habitability or safety of the home.

2. Minimum Property Requirements (MPRs)

The VA appraiser will evaluate the property based on MPRs, which include:

• Structure and Stability: The home must be structurally sound. Look for issues such as cracks in the foundation, roof problems, or any evidence of water damage.
• Safety and Security: All windows and doors should open and close properly. There should be no broken or missing glass. Safety concerns like proper handrails on stairs and functioning smoke detectors are checked.
• Heating and Cooling Systems: The property must have an operational heating system. While a cooling system isn’t required, if the property has one, it should be functional.
• Sanitary Facilities: The plumbing system must be in working order. This includes a functional toilet, sink, and shower or bathtub.
• Electrical System: The electrical system should be operational, with no exposed wiring or non-functioning outlets.
• Water Supply and Drainage: The home must have a safe and reliable water supply, and the drainage system should be effective in preventing water accumulation.

3. Preparing for the Appraisal

Preparation can help ensure a smoother appraisal process. Here’s what you can do:

• Clean and Maintain the Property: Ensure the home is clean and well-maintained. This not only presents the property in the best light but also helps the appraiser assess it accurately.
• Fix Minor Issues: Address any small repairs such as leaky faucets, cracked tiles, or broken windows before the appraisal.
• Provide Access: Make sure the appraiser has access to all areas of the home, including the attic, basement, and any outbuildings.
• Document Improvements: Keep records of any improvements or repairs made to the property. This can be useful for the appraiser to consider in their valuation.

4. Common Appraisal Issues

Some issues are commonly found during VA appraisals. Here’s a list to watch for:

• Peeling Paint: Particularly in homes built before 1978, peeling paint may be a concern due to lead-based paint regulations.
• Unpermitted Additions: Any additions or alterations made without proper permits could affect the appraisal.
• Termite Damage: Evidence of termite infestation or damage must be addressed.

5. After the Appraisal

Once the appraisal is complete, the appraiser will submit a report to the VA. The report will include:

• Value of the Property: The appraised value of the home, which should meet or exceed the loan amount.
• Required Repairs: Any issues that need to be addressed before the loan can be approved.
• Condition of the Property: A general overview of the property's condition in relation to MPRs.

6. What to Do if the Appraisal Comes in Low

If the appraisal value is lower than the loan amount:

• Review the Report: Check the appraisal report for errors or issues that might affect the value.
• Negotiate with the Seller: You might need to renegotiate the purchase price with the seller.
• Request a Reconsideration: You can ask the appraiser to reconsider their valuation if you have evidence that supports a higher value.
• Pay the Difference: If the seller is unwilling to lower the price and the loan amount is firm, you may need to cover the difference between the appraised value and the loan amount.

7. Conclusion

Preparing for a VA loan appraisal involves understanding the VA's MPRs and ensuring the property meets these requirements. By addressing common issues and preparing the property, you can help ensure a smoother appraisal process and avoid potential delays in your VA loan approval.