Low VA appraisals and buyer options - there is a perception that VA appraisers come in low so that the buyer can get a good deal. In other words, the appraisers want to give deals intentionally to Veterans. There has been no evidence to suggest this.
Appraisers doing a VA appraisal should arrive at the exact same value as if they were doing an FHA or Conventional appraisal. They have to follow the same guidelines which is to determine the value of the property regardless of the loan type.
What happens if the appraiser thinks the value will be below purchase price? The VA requires the appraiser to issue what's known as a "Tidewater" Initiative. It is named "Tidewater" after a conference in Tidewater, Virginia when the VA created this process. The appraiser will issue this before completing the actual report. First, the appraiser will notify the person who ordered the appraisal that the Tidewater is taking effect. This is normally the lender who will notify both agents on the transaction who will then have 48 hours to provide the appraiser sale prices of homes or comps to support the purchase offer. This extra step allows the agents to provide additional information before the appraisal is finalized to adjust the final value.
If the appraisal is completed and the value is below purchase price, there are two options to dispute the value which are through the VA channels. The first is through the Staff Appraiser Reviewer on the lender's team who will review the appraisal to ensure it has been done correctly. The second is to dispute the value with the local Construction and Valuation office of the VA. The process can take some time and will likely delay closing.
What are the buyer's options if VA appraised value is low? There are one of three options. The first is for the buyer to pay the difference in cash. The veteran can purchase a home for a higher price than it's appraised for by bringing the cash to the table. Many veterans find themselves not in a position to pay the difference while some choose not to and accept the value provided by the appraiser. Second option is to cancel the purchase, walk away and get their deposit back. However, the appraiser will still need to get paid. Third option, which is the most popular one and that is to renegotiate the terms of the purchase by lowering the sales price to the appraised value, meet in the middle or work out some other agreement to pay a partial of the difference.
This information is brought to you by Lorraine Santirosa a San Diego Realtor specializing in helping Veterans and active duty military buy and sell homes. For more information or help with buying a home in San Diego call 619-248-5484 or visit http://www.sandiegomilitaryrelocationexpert.com
It's important to work with a Realtor that has experience with VA home purchases.
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According to the California Department of Veterans Affairs, San Diego County is home to approximately 265,000 veterans as of 2007.
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