While it can often go unmentioned in discussions about the VA loan program, there really is nothing more central to the program than the VA appraisal of the property. The VA Lender’s Handbook, also known as the VA Pamphlet 26-7, has all of the information anyone would ever want to know about VA appraisals. You can find the VA Lender’s handbook online as a matter of fact, on the VA loan section, then under the lenders section, and download and read it for yourself. In the Handbook, there’s a full chapter that is dedicated to nothing else but VA appraisals and related rules and guidelines.
The chapter that covers appraisals is Chapter 10. Chapter 10 explains the primary purpose of the appraisal as their way of making sure the home is worth at least as much as it’s being sold for, and that the home is an acceptable condition for a veteran to live in. From the Pamphlet: “An appraisal is required to help ensure that any property which will become the security for a VA-guaranteed loan:
– has a value of at least as much as the loan amount, and
– is in a condition acceptable to VA.”
Like everything else in today’s world, a VA appraisal is not free. Paying for and dealing with the official VA appraisal is the privilege of the VA-eligible borrower who is hoping to purchase the home in question. Hopefully the expense for the VA appraisal is only for the initial appraisal; any follow-up inspections by the appraiser that are required as a condition for approval are also charged to and paid for by the borrower. Follow-up inspections are called “compliance inspections” and become part of the picture when the original appraisal found things that would need to be repaired or changed before the home could be compliant with VA standards, known as the VA Minimum Property Requirements, or MPRs.
When it comes to initiating the appraisal, this task usually falls to the lender. The lender is the preferred source of initiation primarily because the lender is usually the one who knows best how to go about requesting one. A borrower or any other party to the transaction would likely have to find a number for the VA online, call it, and hope for the best. In the event that some other party would like to make the request, such as a mortgage broker or real estate agent, the lender needs to make sure that the agent or broker understands all of the requirements for the home in order to pass the appraiser. From Chapter 10: “VA prefers that the appraisal be requested by the lender, although it can be requested by any other party to the transaction, provided the appraiser is assigned by VA. Lenders must ensure that agents and mortgage brokers requesting VA appraisals on their behalf are familiar with the requirements in this chapter.”
It’s important to know that there are requirements in order for a home to be eligible for a VA appraiser. Those requirements are also found in Chapter 10 of the pamphlet, where it also states that any questions on the requirements or for situations where the home is not eligible for appraisal but is already the security for a VA loan to please contact the local VA office. Things that can flag a home as ineligible for a VA appraisal is if it is clearly deteriorating or in obviously bad condition, unless there is some way of assuring that the home can be repaired to meet the VA MPRs. For homes that already have a valid appraisal, a new appraisal can be requested. From the Pamphlet: “No new appraisal can be requested on property which already has a valid VA value determination…Property is ineligible for VA appraisal if any party of interest to the transaction, other than the purchaser, is debarred Government-wide, or otherwise excluded from participation in the Loan Guaranty program due to a VA-imposed sanction for substantially prejudicing a veteran by either
-failing to correct justified construction complaint items
-violating VA Minimum Property Requirements
-deviating from plans and specifications without VA approval
-failing to honor other contractual obligations on houses previously built and sold with VA -financing, or using a sales contract or marketing method or practice which VA considered to be unfair or unduly prejudicial to the veteran involved.”