VA loans are a great way for veterans to get into a home, but they come with some strings and possibly a few extra hoops to jump through. What if the appraiser says repairs need to be made? And what are your options if the VA appraisal comes back low? Do you have any recourse? In this video, I cover these aspects of the VA loan process.
You can watch Part One of this video here
Hey, this is Debbie Wright with Charles Rutenberg Realty, serving St. Petersburg to Clearwater and all Tampa Bay, and I’m here to talk to you about VA appraisals part 2, so follow me.
Okay, here we are, part 2. Just to recap part one, we talked about safety, sound structure, and sanitary those in the “three S’s” that the appraiser looks for in the property. And say that they found a something that needed to be repaired. This is where having the VA rider comes in, hopefully you filled that out as part of your contract and there is a repair limit in there, and the repair item you need should be within that limit, we hope, and the seller has agreed to make the repairs when they excepted VA financing. So the repairs need to be accomplished, and then the VA appraiser needs to be called back out, inspect the repair, sign off on it, and you’re good to go. In the event that there are multiple repairs, we may have to extend the contract closing date, it kind of just depends. Hopefully it’s going to be quick and easy and resolved, and then you can move to the closing table quickly.
The second point I want to make in Part Two here is if the appraisal is low. If the appraisal comes back low and the appraiser sees that it’s not going to be near the purchase price on the contract, they’re going to establish a Tidewater process with their point of contact, so that’s typically the lender. And they’re going to call the lender and say that they’re short, and that they need more data, so the lenders going to reach out to the listing agent and the buying agent and explain that we’re in a Tidewater situation, we have 48 hours or two business days to respond, do you have any additional data to support your price?
At this point, this is where being a good listing agent really plays a key, you’ve got to have all your stuff that you used to price the property, and you need to have that available for the appraiser. You also need to have that list of things that the seller did to the property and the dates that they were accomplished, so if they upgraded the air-conditioning, make sure you have the date that that occurred. If they upgraded the hot water heater a few years ago, you want to make sure that that’s in there, age of the roof, mechanicals, that sort of thing. All the things that they did, if you have a great list summary, you can hand that to the appraiser and that can be used in a Tidewater situation. It should probably be given to them in the beginning.
They’re also looking for additional comparable data. At this point, if a new comp has sold, sometimes it’s a timing issue, and there might have been a closing in the immediate area that’s going to support your price, and so you want to be able to submit that quickly to the appraiser so they can use that in consideration to raise the value. And also, maybe you have firsthand knowledge of something going on in the neighborhood. Maybe you can produce a pending sale contract for them, and you have permission to do that. And you can produce that pending sale contract and they can validate that as being between two parties, they’re going to verify it and call each party, and they can use that as data to support an increasing in value to the purchase price. It kind of depends on how far away from the purchase price you are, but in in this scenario, that’s the example that were using that they can try to get to that purchase price.
Another avenue you can go down is called the ROV, it’s a reconsideration of value, and basically, it’s an escalation to a reviewer inside the VA. You’re going to escalate to someone called a SAR, which is a Staff Appraiser Reviewer, and FHA also has review appraisers, and conventional I think actually has review appraisers as well. And so you can escalate to them for review, and they do have the authority to increase the value within 10%. So you would really have to be in that range before you escalated there, but this is a course of action that you can pursue if you’re unhappy with that value when you fall within that 10%, which is really great that you have that with the other VA, because it is an option that is not offered under FHA or conventional, that they have the authority to actually change the value.
So at this point, if you have any more data, it’s a good idea to submit it, and then you just pitch your case on why you think the value is higher than what’s coming back through the standard appraisal process. And the SAR is going to make a determination on what is best for the veteran. And they could make that determination, not saying they will, not saying they won’t, but they can. So it’s nice to know that they do have that authority. At the end of the day, protecting the veteran is what they’re they’re trying to do. They’re trying to make sure the property falls within their three S’s and that the veteran is protected in the loan, because they’re ensuring the loan for him or her. So we want to make sure that all that is supported, so let’s support our veterans and let’s accept VA loans on properties, and dispel some myths so that they can use some of these benefits that they so richly deserve.
If you have any questions, let me know. Leave me a questions below and I’ll respond. You can subscribe to my channel, I ‘d like that very much, and you could always reach out to me, you can text me, you can email me, you can send me a message on Facebook, or just give me a call and we can chat. I’d love to hear from you and I’d love to hear what you have to say. And that’s that, so thanks for tuning in, and I hope to see you next time. Bye-bye.
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