What The Florida VA Appraisal Process Looks Like In 2023
VA loans are federally-backed mortgages exclusive to Veterans, service members, and their surviving spouses aspiring to become homeowners.
This loan has no down payment requirements or private mortgage insurance, making it one of the most affordable home financing options.
Besides, the interest rates are highly competitive, and there are no prepayment penalties compared to conventional loans.
Like all home loans, the property you wish to buy using a VA loan must go through an appraisal process. The U.S. Department of Veteran Affairs has various eligibility requirements before issuing VA loans to borrowers, and a VA appraisal is one of them.
If you are considering buying a new home with a VA loan or are a real estate agent seeking to know more about VA loans, this helpful post is for you. You will learn what the Florida VA appraisal process looks like in 2023.
Table of Contents
- What is a VA Appraisal?
- Why is a VA Appraisal Important?
- Who Selects the Appraiser?
- When to get a VA Appraisal?
- Where to Order a VA Appraisal?
- The VA Appraisal Process
- What is a Notice of Value (NOV)?
- How to Handle Value Problems
- VA Appraisal Challenges
- Tidewater in VA Home Appraisal
- VA Appraisal Timeline
What is a VA Appraisal?
A VA appraisal is a process through which a VA-approved appraiser evaluates and determines the market value and condition of the property you wish to buy. The appraiser thoroughly assesses the home to ensure it meets the minimum requirements stipulated by the U.S. Department of Veteran Affairs.
Once a lender receives a purchase contract from a borrower, they must order an appraisal via the VA portal. The U.S. Department of Veteran Affairs is responsible for selecting and assigning certified appraisers to appraise the home on sale.
VA appraisals are different from home inspections. First, they are mandatory when purchasing a home using a VA loan, while a home inspection is not. Moreover, it aims to determine the property’s fair market price and ensure it meets VA’s minimum property requirements.
In contrast, a home inspection provides an in-depth review of the house’s physical and structural problems. It doesn’t determine the property value.
Why is a VA Appraisal Important?
A Florida VA appraisal is vital since it ascertains the loan amount does not exceed the home’s market value. It protects you as the homebuyer from getting ripped off, ensuring you pay what the property is worth, not more than you should pay.
As you know, the VA has minimum property requirements for VA loans. Besides estimating the property’s fair market value and overall condition, a VA appraisal ensures the home is safe, sanitary, and structurally sound.
The property must have adequate space for living, cooking, dining, and sleeping. It must be accessible via a public or private street.
Since the VA backs the loan, a mandatory home appraisal goes a long way to protect the department from associated risks when guaranteeing the loan. It also protects the buyer’s investment, ensuring they buy a primary residence at a reasonable price.
The VA, the approved appraiser, and the lender work together to address any concerns raised in the appraisal report, safeguarding everyone’s interests.
Does a Lender Select a Local Appraiser for a VA Loan?
A lender cannot select an appraiser for a VA home loan or any loan. An appraiser must be neutral and work in the best interest of both the lender and the borrower.
To ensure unbiased appraisals, the VA actively selects and assigns appraisers if you want to buy a home with a VA loan.
When borrowing a conventional loan, the lender requests an appraiser by consulting an Appraisal Management Company (AMC).
An Appraisal Management Company is an independent entity without any affiliation with the lending institution. The company performs an administrative function, including picking a qualified appraiser randomly.
The VA performs a similar function to the Appraisal Management Company. They select and assign appraisers when the lender has a purchase contract and has placed an appraisal order.
The VA essentially handles the entire appraisal process. Regardless of the lender’s location, the VA system picks the best appraiser for your area.
When Should One Order a VA Appraisal?
Since a VA appraisal might take time, your lender should place an order as soon as possible. Ideally, your lender should order an appraisal via the VA department on day one after receiving the purchase contract.
Some lenders prefer to wait until they receive a credit card from the borrower before ordering an appraisal. Others wait until the pre-approval stage before requesting a VA home appraisal.
The delay is because the homebuyer is responsible for paying the appraiser, and the lender wants to ensure the appraiser will get paid after submitting the appraisal report.
Ordering an appraisal as soon as possible will remove any doubts and worries about the value of the property you intend to buy. It will also eliminate any anxieties associated with buying your first home.
The VA and lender can promptly address emerging issues, ensuring a smooth and seamless purchase. Most importantly, a speedy appraisal will make sure you close early and receive your loan as you embark on your homeownership journey.
Where Do We Order a VA Appraisal?
A VA appraisal is no ordinary home appraisal process. After all, the U.S. Department of Veteran Affairs is highly involved in the appraisal process.
They select and assign the best appraisers in their eyes for your area. The department has an online portal where approved VA lenders can request certified appraisers.
If your lender wants to order a VA appraisal, they must visit the VA secure web portal. Only lenders approved by the VA can access this portal. They must log into their accounts using their credentials to fill out their details and complete the appraisal request.
Upon receiving the request, the VA will search its database for the appropriate appraiser for your area. As a homebuyer or borrower, you must pay the appraisal fee upfront.
The fee varies based on the type of home and state of purchase. The good news is that you can recoup the appraisal fee at closing as part of your discussions with the property seller.
What Happens During a VA Appraisal Process?
Even though a VA appraisal is an intricate process, it does not have to be intimidating. After all, many factors come into play when determining the home value, and the appraiser does not often have the final word on the property.
Understanding what happens during a VA appraisal can help ease your fears and anxieties. Here’s what you need to know about VA appraisals:
Upon receiving a paid appraisal request, the VA will select and assign an approved appraiser to the home you intend to buy. The appraiser appointed by the VA to handle the assignment must respond and schedule an appointment within two business days.
The appraiser will evaluate the property’s value based on its condition and other comparables to ensure it is sufficient for the proposed loan amount. The appraisal also assesses minimum property requirements before compiling the information into a report and submitting it to the VA-approved lender.
- Upon receiving the report, the lender must upload it to the VA web portal for review by an underwriter, a VA staff appraiser, or a Staff Appraiser Reviewer (SAR). The SAR or underwriter may ask for clarifications from the VA appraiser before determining the final appraised home value.
Do I Get a Copy of the Appraisal Report?
Once the appraisal process is complete, you will receive a copy of the VA appraisal report. The document will provide a reasonable estimate of the home value. It will also highlight a list of repairs needed before securing a VA loan.
Unlike homebuyers, sellers are not eligible to receive a copy of the appraisal report. Nevertheless, you can issue a copy to the seller or real estate agent if you wish to do so.
What is a Notice of Value (NOV) in VA Appraisal?
A VA appraisal evaluates the property you intend to buy to ensure its value is reasonable and exceeds the proposed loan amount. Ideally, the home’s valuation should be higher than the borrowed amount to increase your chances of securing a VA loan.
Upon completing the appraisal process, an underwriter will review the report before issuing a Notice of Value to the VA, lender, and borrower.
A Notice of Value (NOV) is a document that establishes the fair market value of the home you intend to buy. It includes a list of the minimum property requirements stipulated by the U.S. Department of Veteran Affairs that the house must meet before closing the loan.
It may also list issues that need addressing before the loan closes, such as repairs, termite inspection, and proof that a condominium is a VA-approved development.
In most cases, the Notice of Value matches the initial appraisal report. You will most often than not receive an NOV if the property you want to buy has no value issues and the raised concerns have been addressed.
You should expect to receive a Notice of Value within five business days after the SAR or an approved underwriter reviews the appraisal report.
Why is a Notice of Value in VA Appraisal Important?
A Notice of Value is vital in VA appraisal since it signifies you are about to close the loan. It also provides a reasonable estimate of the home value of the property you intend to buy, so you don’t pay more than its actual worth.
The NOV informs the VA and the lender that you are eligible for a loan if you’ve met all the minimum qualification requirements for a VA loan.
The document verifies the initial VA appraisal report since the reviewer must ask for clarifications and corrections before issuing a Notice of Value to the relevant stakeholders.
The VA and the lender cannot approve your loan application without a Notice of Value. After all, the NOV lists problems that require correcting before closing the loan.
What Happens If a VA Appraisal Has Value Issues?
Sometimes, a VA appraisal might have value issues, or various concerns might emerge during or after the appraisal process. The appraised property value might be lower than the proposed loan amount. These problems might adversely impact your VA loan request, reducing your chances of getting financing.
According to VA loan requirements, the requested loan amount cannot exceed the home value. The lender won’t approve your application if the VA loan exceeds the appraised value.
Fortunately, you can solve these issues using these tips:
Even though it may be difficult, some sellers might agree to renegotiate and lower the purchase price to meet the appraised value.
Ask the seller to reduce the cost to match the value in the appraisal report. You may have to give them a copy of the report for consideration.
They might accept your request, especially if the property has been on the market for too long.
Do a Reconsideration of Value
The VA’s primary objective is to ensure all eligible borrowers become homeowners. For this reason, the department agrees that sometimes appraisals might have errors.
They might accept your petition for a reconsideration of value, particularly after receiving comparable sales from your lender and realtor.
The VA may request an appraiser to conduct a fresh appraisal of the property if there is sufficient evidence regarding recent upgrades and repairs that could impact the home value.
Top Up the Price Difference
You could top up from your pocket if there is not much difference between the home selling price and appraised value.
The property value might have decreased because of issues requiring minor repairs. Making up the difference won’t hurt if this is the case.
However, consult your lender and real estate agent before taking this route since paying more than the actual home value is not a wise investment option.
Walk Away from the Contract
You can walk away from the deal if all seems lost and you don’t want to dig deeper into your pockets.
Even though the VA cannot refund your appraisal fee, you can cancel a purchase contract if the home has serious emerging concerns such as safety issues, unstable physical structure, and other health hazards.
What Are Other VA Appraisal Challenges?
Value issues are not the only concerns when purchasing a home using a VA loan.
Even though a VA appraisal is not a home inspection, it assesses if the home meets the minimum property requirements (MPRs). The VA has various occupancy and property requirements that you must meet to secure a loan.
Here’s what to do if the property does not meet MPR criteria:
Ask the Seller to Make the Necessary Repairs
An appraisal report might recommend various repairs before the loan can close. You might not secure a VA loan if these demands remain unresolved. Your first option should be to ask the seller to complete the repairs before the purchase can move forward.
However, the seller is under no compulsion to accept your request, but they might be willing to do so if they are desperate to sell the house.
Repair the Home Yourself
If the seller is unwilling to complete the repairs, you can do it yourself, particularly if they do not cost much. After all, the property will be your primary residence, and it does not hurt if you renovate and repair the home to fit your style and preferences.
Then again, the VA allows borrowers to use their loan money for minor repairs and improvements. However, this provision might vary from one lender to another.
Cancel the Purchase Contract
If everything fails, consider walking away from the purchase. There is no reason to continue dealing with an inflexible seller unwilling to cooperate. Moreover, if the house has severe defects and damages, repairing it could take a fortune, making it unworthy of your time and money.
What is Tidewater in VA Home Appraisal?
Tidewater refers to an extra step of VA appraisal in cases where the home value is below the purchase price. It allows the VA appraiser to request more info regarding the listed price before completing the appraisal. It also gives the realtor or real estate agent 24-48 hours to support the listed sale price.
The realtor must submit the following information:
- Comparable sales.
- A list of improvements on the property.
- Other relevant market data.
When applied correctly, the tidewater policy can make the VA loan appraisal process smoother and seamless. Besides, the VA has a collateral department that evaluates all the comparable sales to determine the actual value of the property you intend to buy.
VA Appraisal Timeline
Usually, a VA appraisal should take between five and 21 business days. However, the timeline depends on the property location, review process, and other factors. Upon submitting the report, you should expect a Notice of Value within five business days.
The VA appraisal process is superior to traditional home appraisals. After all, the primary objective of the VA is to ensure all eligible borrowers become homeowners. You only need to follow this guide to know what to expect during a Florida VA Appraisal in 2023.
With over 50 years of mortgage industry experience, we are here to help you achieve the American dream of owning a home. We strive to provide the best education before, during, and after you buy a home. Our advice is based on experience with Phil Ganz and Team closing over One billion dollars and helping countless families.
About Author - Phil Ganz
Phil Ganz has over 20+ years of experience in the residential financing space. With over a billion dollars of funded loans, Phil helps homebuyers configure the perfect mortgage plan. Whether it's your first home, a complex multiple-property purchase, or anything in between, Phil has the experience to help you achieve your goals.