Of all the hundreds of articles I have written, by far the ones that have attracted the most long-term consumer traffic and comments have been the ones dealing with the pitfalls associated with VA financing, and in particular, the extremely frustrating and heart-wrenching hassles that can result with VA appraisals/appraisers.
In this post, I will simply copy and paste some of the past comments I have received on this topic.
Hopefully, by re-publishing these comments, greater awareness can be made about the problems associated with VA loan appraisals/appraisers, and the desperate need there is for meaningful changes to the process.
It's an atrocity that those who have faithfully served this great country of ours should be subjected to such difficulties!
Hi, We are selling our log cabin at Houghton Lake Mich. We accepted a offer by a buyer with a VA financing. The appraiser used comps that did not even compare to our cabin. Our cabin is stick built that we had put a log package inside and out with most of the logs being cedar. We are selling by owner and do not know if we can locate any comps since we are not Realtors. The market is very slow in this area so the VA appraiser said she had a hard time finding anything to use for comps and she even asked for more time. The appraiser was given the paper work on Oct. 17th 2007 and did not turn it into the mortgage company until November 12th 2007. The buyer is very upset that that it came in Four thousand dollars under his offer. When we told him that two Realtors told us it was worth five thousand over his asking price. We lowered our offer to meet the appraisal price and the buyer is still upset and we may loose the deal. Please if anyone can help us!
Thanks, Susan
So Yeah...my wife and I just got the VA appraisal back. It's t
he middle of January in Colorado and someone has to paint the exterior trim before we close. It's not peeling...it's worn, it's weathered, it needs a new coat. You can almost make out wood grain. This is ridiculous...I am way passed the point of believing that my government knows what's good for me...or can even operate in a manner inherently logical or good for them. If I could start this process over I'd choose another loan type. I've been reading these posts all evening and what sticks out is someone else's point ... "NO BARE WOOD". I probably wouldn't be so wound up if we weren't so close to our closing date (allegedly).
No Bare Wood
I just lost selling my home after two years on this crappy market. I have followed zillow to make sure my price was good. The VA appraiser got the sq. footage wrong, left off over a hundred ft and left out the heated & cooled fl room, it has a window unit built in the wall. It was a portion that was turned into a fl room, insulation, double pane windows a insulated door. My Realtor called with no luck then emailed him a request along with tax records and a survey from when we bought the home. It has been almost a week and my buyers walked along with the deposit. I bought this home at the sq. ft on my survey, I have been paying taxes on this sq. ft, My Realtor has listed it for two years on this sq. footage. Now I have lost over a hundred sq. ft that will be on record until fixed (not counting the fl room), my buyer, the deposits,possibly my relationship with my realtor who was a friend. Is there any recourse? how do you file a complaint with the VA appraiser? Who do I go to, how do i do it? This was ordered by the bank of the buyer, I was supose to pay for the appraisal but after I wouldnt sign to release the deposits the buyer paid.
HI,
We first used the VA loan some 7 yrs ago. We have since moved to another state and are trying to get financing on another home. We have no down payment because we lost money on our previous house due to the change in the economy.
We had a great experience the first time. I wish I could say the same this time. We are working with a mortgage lender that deals solely with VA loans. We were approved quickly and started looking at houses. We placed a bid in on a house that we are really excited about. Paid to have home inspections done and then when we were reviewing the paperwork fir the VA loan, I mentioned that the home was a manufactured home on a permanent foundation. He states that they do not finance manufactured homes. He tries to call a cancel the VA appraisal. Never before has he mentioned that they do not manufactured homes. So now we are in a contract and our financing is gone. Plus we are out a $1000 for inspections that we only have a limited window in which to complete. We tried to find a lender that will underwrite a manufactured home without any success.
So now we have bid on another home. Gone through the inspections process again. And now the appraisal comes in low- because they could not find any comps in the area. So we have now spent another $1000 dollars on inspections. And after my lender told me twice that the first appraisal was stopped, yesterday told my husband that the appraisal was done on the other property there is another $300 wasted. My husband and I are devastated. I am hoping to contest the appraisal but I am still devastated. over $2500 wasted, partially because it was never disclosed that the lender did not underwrite a manufactured home. Also the appraisal listed work that needs to be completed to an older farm outbuilding and the detached garage in order for this house to sell. I understand the need to provide a safe home for the purchaser, but listing the repairs on the older outbuilding floored me. We have no intention of using it. we are not living in it. We hope to eventually repair it and use it. The lender pretty much told my husband it had to be a turn key house. We had a turnkey house that you would not FINANCE!!!
I am totally devastated by these turn of events and discouraged. Any recommendations or suggestions would be appreciated.
Lynn
Rich, A couple of details: I am the Seller. The property is a Split Foyer (Bi-Level) which I have researched to be in the Split-Level class. (The Real Estate Dictionary defines a Bi-Level as: n. A dwelling that is divided vertically into two ground-floor levels.) The Buyer went for a VA loan through a mortgage broker. The mortgage amount and the deal was was $345K. (BTW, DOM was less than one month!) The lender ordered the VA appraisal which returned with the value based on only the sq.ft. of the upper level, and used a Rancher with finished basement for two of the total four comps. The resulting appraisal allowed only 1400 SF of Gross Living Area Above Grade instead of the 2700+ total SF of both levels. (Note- the lower level is full height with full-sized windows in every room, has 3BR w/closets in all, 1BA, Lg Laundry room, Family room w FP, and is above-grade in the rear and the two sides, with 30" of earth pushed up against the front to eliminate the need for steps to the front split-foyer entrance. The property is one acre of all grass and is substantially flat.) The appraisal was riddled with other (>10) substantial errors (ie. claimed that our septic system needs certification when it has always been public sewer. There's more.) The report's appraised value came in at $280K; that's $65K less than the deal. We presented a comprehensive list of the errors to the Buyer's agent, who passed it on to the mortgage broker, who passed it to the lender, who's VA underwriter acknowledged that many of the errors could be corrected but that he would reject any change to the total SF. Two similar properties bordering mine have sold within the last three years; one was VA; I have their appraisals which use the full SF of both levels and use 2-Story Colonials for substitute comps. Over the past 25 years I have had four appraisals done on my property (for PMI adjustment; equity loan, etc.) of which two came back using Ranchers for some comps. Upon my complaint and with with supporting information, both appraisal were revised to use 2-story Colonials as substitutes, and then used the full 2700 SF.
As to this deal, needless to say, the deal broke and the buyer reluctantly walked. And now I'm left with a defective VA-recorded appraisal for the next six months or more and the house is back on the market. My goal is to have this appraisal corrected (particularly the total SF) or removed from the records. I have no standing with the lender, so my recourse obviously should be with the VA. It would also be nice for the VA to be aware of this appraiser's incompetence (Did I mention that I'm also a Veteran?)
Any thoughts, any specifics, anyone?
Is there any recourse with screwed up appraisals?
I am a seller in Wareham, MA who entered in to contract with a military buyer who wanted to proceed with 100% financing through the VA. The problem is that the VA sent a NH appraiser who used only a 1 mile radius of our home (75% of which is water and cranberry bogs and 10% which is summer cottages). She appraised our home for almost 20K less than what the buyer and we agreed (the buyer also requesting 5K back for closing costs) and more than 10K less than what we paid for the house! Our selling agent and the buyer's agent both submitted comps (way above what our house was listed for) within a 2 mile radius of the property. The buyer, knowing the house was well priced and would not find anything comparable even in the price range of the comps that were submitted, also got involved writing letters, etc. The bank with which the mortgage was to be underwritten agreed that the 1 mile radius was insane and that the comps submitted seemed appropriate; they further agreed that the appraisal should be contested. The paperwork was sent onto the VA for review.
After more than two weeks - paperwork lost, given to the wrong person, weekends, holidays, etc, we were told today that the adjustment was refused. No reason, no explanation. We have now been waiting to act upon a counter offer for buying a house ourselves - a house than we will now lose because there are other offers on the house. We will also lose the opportunity to take advantage of the tax credit which will end April 30th. We were waiting for some sort of midway meeting point with the VA - two weeks they've been fooling around to tell us they won't adjust when we could have put our house back on the market and made a last attempt to find another buyer before losing the house that we want to buy and the tax credit that will soon expire! How is it okay for them to send an out-of-state appraiser, who is clearly unfamiliar with property values in Massachusetts, to determine the fate of this transaction? I am so peeved at the VA that I feel that I'll never enter in to negotiations that involve them ever again! Does anybody have any suggestions of recourse or who I might submit a formal complaint to? It seems crazy to me that people would be allowed to screw up peoples lives like this. It can't be good for the moral of military folks and it can't be good business for the banks that they work with. How can stuff like this be helping to improve the economy of this country?
I've read the comments on your blog and it seems there is a trend with VA appraisers. I'm a buyer who recently put a contract on a new-build home for $251,000. I went VA because I recently went through a divorce and I need to use my available cash to pay for furniture, appliances, etc. I was approved for the loan and everything was going great until the appraisal. Other homes in my area sell for about $114-$117 per square foot. The builder listed the house I was buying at 2150 square feet. The appraiser not only adjusted that number down (2096 sq ft) but then valued the home at around $112.59 per sq ft. Altogether that reduced the appraised value to $236,000, which would actually be less than the builder paid to build the home. Not a single home in that neighborhood has sold that low, not a one. Instead of using the normal 6 comps, he only used 3, one of which was on the other side of town in an older neighborhood and was valued significantly lower than any of the homes in the neighborhood I was buying in.
It was determined that the VA appraisers establish square footage by measuring the outside of the home and then estimating wall thickness and coming up with a number that way, not by actually measuring the real living space. To me, this "that looks about right" way of measuring square footage is inaccurate at best, and is probably why I lost 54 square feet on the home. The builder swears up and down the home is 2150, and we're currently trying to get the blueprints to challenge the appraisal's number.
Then there's the issue of the value of the home. Even if we get the square footage moved up to the original 2150 sf, the value would still sit at $242,000 and I doubt the builder would be willing to go down that far. How on Earth can an appraiser say this house is worth $112/sf when the next cheapest home in this new neighborhood in a very good part of town goes for over $114/sf? The house next to mine (built by the same builder) closed at nearly $117/sf. Some of the smaller 3 bedroom homes in the neighborhood next to this one are going for around $120/sf.
We provided comps showing at least 3-4 homes that closed with over $116/sf, and many others that closed between $114-116/sf. The builder is standing firm on his value (he already came down in price a little, threw in a fence and some closing costs), and for good reason...no other house has sold for that little in that area. I read you can ask to challenge the appraisal, but after that, then what? Somebody mentioned paying to get a second appraisal...but then again I've heard that the bank and the VA wont' accept a second appraisal. If this guy won't budge on his obviously way-low numbers, the deal is dead.
Stories like these need to make their way to the media, because in this day and age where our housing industry needs a pick-me-up, it's a real shame to have government-sponsored appraisers undercutting the market by low-balling the properties.
Since April we've been under contract to purchase a newly-built home at $166k. We are suppose to close in 4 days. Today I called the lender to see if our paperwork was at the title company and she told me no, because there was a problem with the VA appraisal. I almost died, I knew it wasn't going to be good, I had heard too many bad stories to think otherwise. Anyway, she told me the appraiser only compared our house to short sales, not resales or builder-priced sales. Had she, the house would have appraised for in the $170s-180s according to our realtor (over 30 houses built sold in the neighborhood in the last few months alone, so it felt like a safe estimate, though nothing is ever certain). Because it was compared to short sales, it appraised for just over $90,000. I think that's somewhere around 40% under purchase price! Our lender told the appraiser that she won't accept that, that it needs to be redone compared to builder-priced sales and resales, not short sales. We aren't buying a short sale, FYI, it's a brand new home. I guess I don't really have a question, unless you know what I can legally beat my appraiser upside the head with. All day I've been shaking my head going, WHAT was she thinking? She thought this was the way to go? Seriously? At the least we're looking at delaying our closing- not fun, as we have a date we need to be out of our apartment, a storage company from my husband's military move that is itching to deliver our belongings, and a premature infant with no friends or family nearby to help care for him during the moving/unloading process except on specific dates they are flying in just for that reason (about 2 weeks after our original closing).
Maybe you can tell me if short sales are even supposed to be compared to a brand new full price home NOT bought on a short sale? For instance, if the redone appraisal compares 3 short sales and 3 builder price sales, is that actually acceptable?
While my husband and I do not live in WA, we are experiencing the same difficulties with the VA in AZ. My husband is active duty military currently stationed in AZ. We are newlyweds and firstime homebuyers and were very excited about this whole process...until the VA appraiser came into the picture. We were supposed to close tomorrow, and currently have not had our appraisor agree to the asking price (even though the house was appraised by a non-VA appraiser and was valued at $15,000 more than the asking price). This is the 3rd house we have put an offer on and we are very frustrated with the whole home buying process. The VA is supposed to HELP veterans/those that are currently serving our country, but so far, we are not sure how they are helping us out. I apologize that I don't have anything positive to comment on regarding your situation, but I truly appreciate being able to air my frustration with the VA. Depending on what ends up happening, my husband has already drafted a complaint letter to the VA. Maybe some day, our voices with be heard by the VA and they will draft better policies/procedures to help us all out!
Rich Jacobson is a licensed Real Estate Broker providing Knowledgeable Empowerment and Relentless Representation for his clients of residential properties and vacant land throughout all of Kitsap County WA and portions of Pierce, Mason, and Jefferson Counties. You can also find him at KitsapLife.com, HomesByHarbors, SOUNDBITEBLOG, Everyday CK, and Crabbing in the Hood, or you can e-mail him: kitsapagent@gmail.com
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