The VA’s appraisal process often gets a bad rap. Sellers, real estate agents and even some veterans bemoan what they see as a nit-picky process hung up on small details.
The reality is the VA appraisal process is one of the big reasons VA home loans are the safest mortgage product on the market. Beyond establishing a property’s value, the VA appraisal evaluates health and safety conditions that could impact veterans and their families. These conditions, known as Minimum Property Requirements (MPRs), range from ensuring there’s adequate water and sewage systems to evaluating roofs and crawlspaces.
We provided a more detailed look at the Minimum Property Requirements a few months ago. This post is more of a public service announcement, if you will. Prospective VA homebuyers need to understand that an appraisal, even one that digs a bit into property conditions, is not the same thing as a home inspection.
It’s an incredibly important distinction, and it comes with one key takeaway: Get a home inspection.
You can think of the appraisal as a 100-foot view of the property. In contrast, a home inspection is more like a 10-foot view that winds into cracks and crevices in search of potentially significant problems — problems that, if undiscovered, could cost you thousands of dollars down the road.
Home appraisals are nowhere near as involved as home inspections can be. They aren’t inexpensive, typically costing from $300 to $500, but home inspections are well worth the investment. A problematic home inspection can save you money in a couple of important ways. We mentioned the first, in terms of turning up high-cost problems that could develop or are already in motion. But home inspections can also help buyers in the short term.
Inspections and appraisals come after you enter into a purchase agreement with the seller. Make sure your contract comes with a stipulation regarding the home inspection. In essence, these stipulations ensure you can walk away from the purchase (with your earnest money intact) if problems arise during the inspection.
They also allow you to renegotiate the purchase price based on the inspection’s findings. Rather than lose a sale, homeowners may agree to provide allowances, make changes or otherwise drop the price in order to unload the property.
You don’t get a choice regarding the VA appraisal. It’s a mandatory part of the process.
Consider a home inspection to be the same.
Photo courtesy of Beautiful Insanity Photography