How Buyers and Agents Can Handle Common VA Appraisal Problems
A problematic appraisal is a typical fear among buyers and agents.
Whether in the form of a low appraisal value or a litany of mandated repairs, VA appraisal challenges can be alarming. VA appraisal problems can slow down the process and even force buyers to restart the house hunt.
Fortunately, buyers and their agents have options for handling appraisal challenges. Read on for solutions to the two most common VA appraisal problems: mandated repairs and a low appraisal value.
Problem 1: Repairs ordered
The VA appraiser will hold all properties to a list of “Minimum Property Requirements” (MPRs.) MPRs ensure that all homes purchased with VA loans are safe, structurally sound and hazard-free.
But not all homes meet those criteria. Appraisers will carefully note any deficiencies and list all repairs necessary to bring a home up to VA standards. Those repairs must be completed before a VA loan can be finalized. What’s a buyer to do once repairs have been mandated?
- Strategy 1: Ask the seller to complete repairs. Relay the list of VA-mandated repairs to the seller. Let the seller know that if the repairs aren’t completed, you won’t be able to purchase the property. With luck, the seller will understand the value of your offer and agree to make the needed repairs. Once the repairs are finished, an appraiser will conduct a secondary appraisal. Assuming all repairs have been properly completed, the loan process moves forward.
- Strategy 2: Look for errors. If you suspect an appraisal error has been made, you may need to challenge the report. Perhaps the appraiser noted that you have well water instead of city water. Maybe the appraisal mistakenly reported that a handrail is missing on the back steps. Mistakes happen. A lender can petition the VA for an additional appraisal. Let your lender know about pertinent errors and ask if a secondary appraisal is a possibility.
- Strategy 3: Walk away from the purchase. Appraisals can occasionally unearth devastating faults or costly surprises. If the appraisal uncovers problems that you’re not willing to deal with, walk away from the purchase. You may be out the cost of the appraisal, but that’s a small price to pay for your sanity.
Problem 2: Low appraisal value
Today’s rapidly changing market can bring equal volatility to appraisal values. A VA loan can’t be issued for more than the appraisal value, so a low appraisal can send buyers scrambling. Consider these three strategies for handling a low appraisal value:
- Strategy 1: Ask the seller for a price reduction. Let the seller know the appraisal value came in below the sales price. Ask the seller to lower the sales price to equal the appraisal value. This is the most common solution to an increasingly common problem, especially in the current housing market.
- Strategy 2: Ask for a Reconsideration of Value. A buyer can apply to the VA for a Reconsideration of Value (ROV) if the appraisal value seems mistakenly low. Buyers will need to provide supporting documentation such as the original Comparative Market Analysis (CMA) or details on other comparable sales that weren’t used in the original appraisal. Ask for your agent’s assistance, and remember that requesting an ROV doesn’t guarantee the VA will order another appraisal.
- Strategy 3: Make up the difference in cash. Buyers can also choose to make up the difference between the appraisal value and the loan value in cash. But buyers need to be cautious before grabbing at this straw. It may not be wise to pay above the appraised value of a home, particularly if market values in your area are still declining.
Get it right from the start
What’s the best way to prepare for the VA appraisal? Pick a house in good condition and select the right professionals to assist you, including a VA-savvy agent and an experienced VA lender. Knowledgeable experts can steer you to sound homes and carefully guide you through the VA loan process.
Photo courtesy of Fort Meade
50 Comments
Yeah, like the VA is going to up the appraised value. Asking for a reconsideration is a exercise in furtility. And my understanding is the vetern is never allowed to make up the difference, as if they had the money to begin with. My experience is that no matter how bad the comps were and how good the comps you provide, they do not change anything. Had one appraise $20,000 higher 3 months later in a declining market.
My wife and I went to Fla.. VA all the way. We took our agents advise and put in a full price offer’ After the appraisal came back the house was appraised 30,000 less than our offer. This was a problem because we had all the closing costs wrapped into the full price offer. Even after the appraisal came in… where we could not act on the house, our VA Realtor ordered the inspection on the house and pool….We are now out $900 and have nothing…. while the home seller knows the value of their house and their pool and house have been inspected on my dime.
So sorry to hear that, William. So the agent recommended the inspection after you’d already received the low appraisal value?
I have a buyer that has fallen in love with a home where the a/c (duct work intact) and appliances are missing. It is also a short sale so the seller does not have any money to replace them. It won’t pass a VA appraisal but my buyer can’t stop thinking about “her dream home”. Any suggestions?
Hi Maureen – The missing a/c and appliances don’t have to be deal-breakers for VA financing. They may lower the value of the property, but they shouldn’t stop a VA loan from going through. Does the property have other problems that make you feel like it won’t pass the VA appraisal?
If a house will not pass VA appraisal are you entitled to your earnest money back.
Yes indeed! All buyers are entitled to a refund of their earnest money if the appraisal value falls short and the buyer decides to back out of the sale.
Thanks Jessi, I expect that would include if they decide the roof needed to be replaced which is an item that cannot be repaired as part of a VA loan.
Hi Sheryl – If the seller refuses to make repairs necessary to bring the home up to VA standards, a buyer can walk away with his/her earnest money. In order to meet VA criteria, roofs must be free of major damage and have at least two years of usable life remaining. Some sellers are willing to do repairs to bring roofs up to VA standards, but, of course, that’s not always a guarantee. Let me know if you have any other questions!
Thank you. We actually negotiated a lower price than market to make certain cosmetic repairs and re insulated the floor. Our lender said it is permissible to make certain repairs as part of the VA loan but the work would be performed by the buyer and not the seller. Is this in line with what you know? Will be interesting to see what the appraisal comes in at and what repairs are needed. They did the appraisal about three weeks ago and we have to close by Oct 5th or the bank can void the short sale offer,
I’ll be honest – I don’t think it’s a good idea for a buyer to EVER do repairs prior to owning the home. If the appraisal goes poorly or anything else goes wrong with your loan, you’re out the repair costs and don’t have a home to show for it. Short sales are tough, because banks usually don’t want to do ANY repairs. But again, I want to stress that it’s not a good idea for a buyer to do repairs prior to owning the home. That might mean that you’ll lose out on this particular home, but I think there’s too much risk in repairing a home that might not ever be yours. Hope that helps – let me know if you have any other questions.
Most definitely I agree with you and would never do that (as a person who permits illegal structures for a living). It was my understanding that there was the ability to use up to $20,000 to make small repairs necessary, nothing major, within a certain time frame 2 months, via an escrow hold back. Last of my questions, thank you so much for your responses.
Hi Sheryl – Sometimes a VA lender will allow you to do an escrow holdback if repairs can’t be completed due to poor weather conditions (for example, a house in Alaska that needs a new roof in the middle of January). That allowance varies by lender/buyer/property. Hopefully that helps – let me know if you have any other questions!
VA loans negate earnest money and use the weight of the U.S. to back door negotiations. Not to mention the hassle and additional fees. Sellers should avoid VA in a healthy market.
I am a seller- I have a buyer who did have a va appraisal done and my realtor was told by the buyer’s agent that the va appraisal came back at contract and no required repairs. Now the lender is asking for more repairs and would not forward the va appraisal report saying that the buyer paid for it. I need proof that the va appraisal has asked for the repairs. I think the buyer is trying to get more than I agreed to do. Thoughts?
Your agent wasn’t provided with a copy of the VA appraisal report?
We recently had a VA inspection done on a home we are purchasing and the inspector has come back for the second time with more repairs required. I think the repairs that he came back with are really minute and a waste of time. He says that there is a shrub touching the brick on the house and he wants it trimmed and then also there are some very small, and i mean very small paint chips on a few of the shutters around the home, smaller than the size of a quarter and he is demanding that all the spots of wood showing where the paint has chipped, be repainted and we are supposed to close in 2 days. I think there is some sort of personal vendetta against maybe one of the realtors we are working with or something of that sort because this just seems ridiculous. Do you know how we can file a formal complaint against this inspector? He has also refused to put these demands into writing so we don’t know what to do with this situation. We just want to move into the home and get out of living in a hotel, because we have been living in a hotel since we closed on our home a little over a week ago.
@Jenn: Sounds like a frustrating situation. Many VA appraisal rules are vague, leading some appraisers to be pickier than others. Your appraiser sounds particularly nit-picky, but he probably isn’t violating any VA rules. Shrubs technically shouldn’t be touching the home, since they can damage the siding. Chipping paint on a pre-1978 house MUST be scraped and repainted, but only needs to be repaired on a newer home (built from 1978-today) if there is a risk of surface deterioration. There’s a lot of gray area in an appraiser’s world, and that can be frustrating for buyers ready to close. If you still think a formal complaint is necessary, you can voice your concerns to your local VA Regional Loan Center. Best of luck to you – keep us posted.
I am purchasing a Fannie Mae via VA financing.
The inspection report was completed and noted several safety issues (furnace leaking gas, bare wires showing through-out the home, broken window, and so on. When the appraisal was done, the VA approved appraiser never noted any of these items. Now the seller is balking at doing any repairs because of the appraisal report. Any thoughts? (the home appraised for exactly what I offered)
@Nelz: I’m very surprised the VA appraiser didn’t note those safety concerns. With that being said, Fannie Mae REOs are usually sold “as-is.” Kudos to you for getting a thorough home inspection! My advice: get some professional guidance regarding the safety concerns, and estimates for the repairs. Decide for yourself if the costs and safety risks are worth pursuing. Best of luck to you – keep us posted.
We are trying to sell our home. We recently had a VA appraisal come back much lower than we or the buyers had easily agreed on and an amount that they were approved for. This appraiser was 81 yrs. old and in a very bad mood when he arrived. Walked around the outside in the wet grass and then proceeded inside (without removing shoes even though I had posted a sign asking to removed shoes due to off-white carpet). He complained about traffic, had a stiff neck, gripped he had asked for a land survey. I politely advised that our realtor had provided a package for him and he started criticizing he probably had put in inadequate comps. Then he literally began swearing and cussing the Democrats for him losing over $200,000 in his 401K and on and on and then complained about all the traffic he was going to have to deal with after he left our home. I kept smiling and was polite, but this appraiser was definitely our of line. I may have overlooked this if I was happier about our appraisal, but a -$26,600 appraisal was ridiculous according to both out realtor and the buyer’s and his disrespect was highly abusive. I feel this appraiser should NOT subject another person to this kind of treatment. He did a huge disservice to both parties and to this struggling economy. Now we’re back on the market and starting all over and our previous buyers have to also start over. Time and money lost on both sides and a appraisal that we’re stuck with for 6 months? Can anything be done?
Hi JP – If you feel the appraisal is erroneously low, you can always file for a Reconsideration of Value: check out this post for more information. If you feel the appraiser was totally out of line, you can also file a complaint with your VA Regional Loan Center. Best of luck to you.
I had the same experience and lodged a complaint with VA. The VA Regional Office told me that the more complaints a fee appraiser receives, the more likely they will be removed as a VA Appraiser. Do your part and complain!
separate FHA and Fannie Mae appraisals for townhomes in my community were the same, $102K. Buyer and I agreed on this as a fair price, however, VA appraiser valued the unit at $93,500. She used bank owned properties for comparable sales and not the owner owned occupied which the most recently sold and at a higher price. I wanted to sell to a military person as a thank you for all they’ve done. When my husband (a Viet Nam Vet) and I bought our first home no banks wanted anything to do with us since we ask about a VA mortgage. Why the big difference is appraisals and why isn’t there any communication among the realtors, lender and appraiser?? Seller’s realtor is not allowed to view report. Who makes up these rules anyway. We should be working together to instead it is another government covert operation.
Hi Jane – Have you talked to your agent about submitting an ROV request? Any party to the transaction can submit an ROV, and your agent should be able to provide solid guidance on whether that’s a worthwhile move (or not). Your appraiser is responsible for determining market value. That value can fluctuate based on SO many factors, so it’s difficult to say if the appraisal value is erroneously low. Consult with your agent and see if they feel an ROV challenge is a smart move. If not, consider renegotiating with the buyer or moving on to another offer. Let us know if you have any other questions, and best of luck to you.
Does a VA mortgage loan require a house to have city/public water instead of a well?
VA loans can be used to purchase properties with well water. As long as your well provides safe drinking water and meets local health code, you’re in good shape.
If your home needs repairs you might think twice before accepting a VA funded offer. Also, of you are a VA buyer you should be getting guidance from your Realtor to avoid homes that need extensive repairs. Also, kind of risky, but you can always get you own inspections, and if you provide them to the lender, they will require those repairs be done. As an REO agent, I can tell you banks will do lender required repairs. If underwriting requires it, it is just as lender required as if the appraiser calls it.
We recently made an offer on a home using a VA loan. The appraisal came in low. Do I pay for the appraisal? Do I get my EMD back?
Hi there – Buyers are usually responsible for the cost of the VA appraisal, unless your seller agreed to pay that fee during your earlier negotiations. You do have a few options for handling a low VA appraisal value, so you don’t need to abandon all hope just yet: check this post for more info. If you don’t go through with the purchase, you will receive your earnest money back.
What is a good pricing to put in the Inspection and Appraisal line of the Rider for the VA Loan. It states the costs of the seller for appraisal repairs will not exceed ___________which is in addition to the other repairs of a standard offer.
Not sure I understand your question, Judy – could you provide more information?
My clients are thinking about making an offer on a home with the condition that the seller replace the a/c-heater, water heater, install french drains, and increase the slab exposure to 4″. This will be written directly into the contract. Then we will have the inspection and the va appraisal. What is the best order in which to do all of this to make sure everything passes, and my clients don’t throw money away on an appraisal, or have to get the appraiser to come out twice to reinspect? Thanks!
Hi Bev – There’s no real guarantee of good results in this situation. You can always ask the seller to pay for the VA appraisal (and compliance inspection, if necessary), but depending on your market, that might be a bad idea. VA loans are best-suited for homes in good condition, and if this property needs a lot of work, you might have a rough road ahead. Review VA appraisal guidelines via this blog post, and also check VA Pamphlet 26-7. If the potential home falls far short of VA guidelines, I would be hesitant about pursuing this property. Best of luck to you, and please let me know if you have any other questions.
This may sound completely stupid but..is the appraiser the same as the inspector for a VA loan, or do they send two different people? I ask because our appraisal is done (still waiting results) but we did go out to the house with him, thinking that the inspection was separate. My realtor said he did a good job as far as appraising the property, but didn’t do a thorough house inspection. We ARE getting a pest inspection done, paid for by the seller on top of this.
If we get a second inspection that shows repairs needed to be up to VA standards, how can we get those paid by the seller?
Hi Ashley – Thanks for the question. The VA appraisal is completely separate from a professional home inspection. The VA appraisal is mandatory if you’re going with a VA loan, and ensures the property is up to VA standards. You’ll get an appraisal report back, which will let you know the repairs needed to bring the home up to VA standards. You can ask the seller at that point to pay for any needed repairs (your agent will help you with this). The seller may agree, or may not.
The professional home inspection is optional for home buyers. But please please PLEASE do NOT skip out on a professional home inspection if you’re going to buy a home. The VA appraisal will check for certain items, but your agent is 100% correct – it’s not a THOROUGH home inspection. A professional home inspector will examine every nook and cranny of the home, and alert you to unseen problems. It’s such a critical information-gathering process, and should NEVER be skipped. Any problems uncovered during the inspection can also be negotiated with the seller. You can ask the seller to do needed repairs (again, the seller may agree, or may not).
Please check this blog post for additional information: How a Home Inspection Differs From the VA Appraisal, and let me know if you have any other questions. Best to you!
Sorry. We did NOT go out to the house with him, because we thought it was two different processes.
My husband and I recently began looking for a home. We are now on our 8th offer. It seems that a VA loan is the bane of sellers and when competing with other loans types does not stand a chance. This is disappointing and I never expected this to be problem. Do we just continue to submit offers? At this point we do not have 20% down payment so we cannot qualify for a conventional loan. While I feel confident that this will somehow work out, on somedays it gets a bit pointless. I am just wondering what thoughts are..
Hi Regina – Thanks for commenting. There could be a number of factors affecting your purchase. Some sellers are sadly misinformed about the VA loan process, and assume it’s a complex, frustrating loan option. The VA loan process is immensely smoother than it was 10 years ago, but some agents/sellers are unaware of that fact, and simply reject any VA loan offers.
I’m also curious as to the types of homes you’re pursuing. VA loans aren’t intended for the purchase of fixer-uppers. The VA appraisal ensures that homes meet certain standards, which many older homes simply don’t. Therefore, owners of fixer-uppers are understandably hesitant to consider VA loan offers.
You might want to check out this blog post for more information: “5 Tips to Get Your Next VA Loan Offer Accepted“, and don’t hesitate to contact me if you have any other questions. Rest assured – someday soon you’ll find a great home for you and your family! Thanks, Regina – best of luck to you!
We have an offer on a shortsale and have been waiting since the end of Dec. It is now in the final approval department and we get an email from the buyer’s realtor stating that the pool pump in the pool is broken and the “owner hasn’t been able to fix it and will soon have algae”. Will this affect the value and/or the VA appraisal? We really LOVE this house but would hate to spend money and lose it for he appraisal and/or any repairs. Would the pool pump not functioning be an issue here in FL or should we push (and hope) the seller reapirs it? Thank you so much.
It’s going to be a judgment call on the part of the VA appraiser. If the appraiser feels that the broken pump is a health hazard, then you might have a problem. My advice? Talk to your agent. If your agent has experience with VA appraisal standards in your area, they should be able to provide solid guidance on how to move forward. Thanks!
Similar to the roof comment above. We have a contract on a home and the appraisal supports the value. However, the appraiser also said the roof needs to be replaced. Our separate, professional inspector said it had conservatively 3-4 years in it; the 4-point inspector (insurance co. requirement) said and wrote 10 years of life left. I believe that one the most because the insurance company has to pay out if the roof goes in a storm (coastal Florida). We’re supposed to close in a week and the mortgage broker is trying to get the appraisal changed (he has out inspection reports). Don’t know what is going to happen. I doubt the sellers will put on a roof; even if they did, there’s not enough time. I suspect someone will say I should and I agree completely it’s a bad idea. Heck, someone could come up with a reason not to close and, whoopie, they have a new roof at my expense. Yes, some will say “there’s recourse if you write a contract.” Like I want to spend the rest of my life in court. Dunno what will happen but, if the broker is unsuccessful, it’s back to square one. BTW, this Appraiser took a long time to get the report back and I understand the broker complained. Maybe a little something got added as a reprisal.
Hi Richard – The appraiser’s opinion is the one that matters most at this point, so your contract is in the hands of your appraiser and your lender. Even if your inspector was right, and the roof still has 3-4 years left, let’s be honest: That’s not much time. Your lender wants to make sure you’re making a solid investment, so they’re going to be extra cautious. A roof in need of replacement within the next few years is a pretty big warning sign. Roofs are expensive, and your lender wants to ensure a roof replacement in the next couple of years won’t leave you unable to pay your mortgage. In the real estate industry, it’s fairly common for a seller to agree to replace the roof. So I wouldn’t panic yet. See what your lender and appraiser recommend, and go from there. Your agent can help you renegotiate the repair, if necessary. If all goes well, you’ll have a great home (with a new roof) sooner than you know it. Best of luck to you.
We purchased a 105 year old home about 5 months ago. A month ago I received notice that our property taxes would be increasing and after talking with the county appraisers office and telling her about some issues with the home she asked me about our VA appraisal and why these things weren’t fixed before our purchase. Our VA appraiser did not list one single thing that needed to be repaired on his report even though our home inspector found some issues and so we were left to negotiate the best we could on our own without the VA’s help. I just wondered if “no repairs needed” on a 105 year old house is normal?
Hi Angela – Thanks for the question. Just to clarify, the VA appraisal doesn’t serve as a guarantee that your home is perfect. The appraisal ensures that a home meets basic VA criteria, and that the value of the home meets or exceeds the purchase price. The role of a professional home inspector is to help you identify flaws within the home. The VA isn’t responsible for “helping” you during that process. If flaws were discovered during the inspection, your agent should have helped you negotiate through those issues with the seller. Did you bring those problems to the seller? What was the response?
I feel like we’re in VA hell right now. The house we are under contract with was a house we were outbid originally by $2k. Those buyers lost the house due to not disclosing a past bankruptcy. So to our luck we were notified of this change. They had already been through the apprasial phase and the apprasial came back in at $175,000. The sellers originally were asking $169,900. We now have gone in at $178,000 in order to include closing costs. Our VA apprasial was done and has come back stating the value of the home is only $167,000! We are all in shock! This is clearly causing a horrible domino affect as the sellers are set to close on a new home and their sellers as well. Our agent is going back with additional comps in the neighborhood that were overlooked but we feel helpless and hapless and fear we are going to lose our first home. We are just months shy of our wedding and if this falls through, we will be having to put this on hold for at least another year. Cannot understand how this new appraiser has low-balled the price by so much? Very disheartened, loosing sleep and praying for a positive outcome/miracle.
Hi Heather – Thanks for reaching out. Let’s look at your situation a little closer. The asking price was $169,900. The appraised value was $167,000. So to be fair, the VA appraiser really hasn’t “low-balled the price” by very much. A lender isn’t going to lend you more than the appraised value of the home, so it was definitely risky to try for a $178,000 loan, especially knowing that you were going over the first appraisal value of $175,000. If you’re working with a good agent, see if there are other comps that can be used to support a Reconsideration of Value. You can also try re-negotiating with the seller, and seeing if they’ll come down on the asking price.
I know it’s tough when the appraisal value comes in below the purchase price. It can be one of the most frustrating things in the homebuying world to deal with. But it does happen. Work with your agent, and hope for the best. We’ll keep our fingers crossed for you.
Thanks for your reply. I suppose everyone is basing the price off of the first appraisal of $175,000 & not the original selling price of $169,900. It’s really shocking that the difference in two appraisals would be so different and only a couple weeks apart. $175,000 vs $167,000. I’m seeing that this is a very subjective process. We have asked for a ROV as the appraiser used some homes more than 1 mile out and there are plenty of comparable a in the same neighborhood. We asked for the ROV last Wednesday and as of today, Tuesday – no one has heard from the appraiser. We were supposed to close yesterday and our loan agent is now on vacation for a week, not to mention the sellers are buying as well and their seller is slated to be on vacation next week. It’s like the never-ending comedy of errors. We’re the first in this domino affect but have been really held up due to one person. It’s just a matter of having some patience and the waiting game. Fingers are still crossed and trying to remain hopeful for the new closing date closer to the end of April now.
I have just built a new home with a boiler plate builder, new construction with plenty of upgrades and amenities. The appraisal came in for about $14,000 less than the sale price. The selling company says I should contact me congressman and that the VA is screwing me, are they? or is the sell trying to rip me off. Ive put over 3 months of my life into this house including picking out all the particulars and was supposed to close tomorrow when I found out the news. Should I just walk away and tell the seller to find a new buyer that likes all my specifics or should I fight the VA.
Hi Christina – Thanks for reaching out. Let’s look at this from another angle: What rationale does the VA appraiser have to undervalue the home?
The VA appraiser is responsible for identifying the market value of the property. It’s unfortunate that the value came in below the sale price, but that doesn’t mean that the VA appraiser is wrong or trying to take advantage of you. It’s possible that the VA appraiser made a mistake in the valuation, and if so, it’s your responsibility to identify that mistake and try to fix it. Review this post with your agent: “How to Challenge a Low VA Appraisal Value“, and best of luck to you!