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The VA loan appraisal process is in place to protect the Veteran from purchasing a home that will cost more than the fair market value for a particular location. By checking the home’s condition thoroughly and according to the VA’s minimum property requirements, Veterans can be assured that they will not be living in a home that requires major maintenance and repairs which ultimately can drain their finances. Since VA loans are different than other types of mortgages, understanding the VA appraisal process will help borrowers know what to expect at this stage of the loan.

When processing of the VA loan has begun, the lender will order an appraisal through the VA portal which is maintained by the Department of Veterans Affairs. The VA will schedule the appraisal with a randomly assigned appraiser who is approved by the VA for this purpose. VA appraisers must be up to date on current market conditions and trends for their particular location. Once assigned, the VA appraiser has 10  days to complete both an interior and exterior appraisal of the property, as well as, find and compare the home with similar properties in the area. Under some circumstances, the VA allows the appraiser additional time to complete the report.

Once the VA appraisal is completed, it is uploaded to the VA portal where the lender will have access to view and print it. Through the Lender Appraisal Processing Program (LAPP), a Lender Staff Appraisal Reviewer (SAR), who is usually the VA underwriter, will examine the appraisal to make sure that it is complete and meets VA requirements. In addition, they will determine if the property value is reasonable and have the authority to make up to a 5% adjustment in either direction with supporting documentation. This adjustment is not common and, therefore, should not be relied upon as a right to have value increased to meet the sales contract price.  A Notice of Value is then submitted to the borrower and is good for 6 months.

In some cases, the contract sales price of the home may be lower than the value determined by the appraiser. If the appraiser feels that value may be lower than the contract price, they are required to notify the lender of such. This notification is called the Tidewater Initiative and allows any party to submit additional comparables within 48 hours for consideration. The appraiser will then formulate his opinion of value and submit the report to the VA portal with lender notification. Submitting additional comparables does not guarantee the value will meet contract price, however, it is a unique feature for VA loans that helps make the transaction work for the Veteran.

The VA understands appraising is not an exact science and mistakes can happen. To address this issue, the VA has a built in appeal process that is used which is called a Reconsideration of Value. Reconsideration of value is the final recourse at having a value changed. This reconsideration can only be requested by the lender and supporting comps/documentation will be sent along with the reconsideration to the appraiser who then has five days to respond to the reconsideration.All parties can help supply the documentation, but it is up to the lender to submit the request to the VA appraiser. At this point, the VA can become involved based on the appraisers recommendations of the (ROV) and a final judgment is made.  Once a final NOV has been issued, a new appraisal cannot be requested to obtain a VA loan for 6 months even if a new lender is selected. In addition, if the financing falls through and a new Veteran attempts to purchase that same home within 6 months, the previously issued NOV is still valid and must be used.

The entire VA loan appraisal process is set up to protect the Veteran from making a home purchase that is not safe, secure and can hurt the VA borrower’s financial position. Because VA loan guidelines and appraisal process are different than other loans,  a lender who has dedicated VA loan experience will know every VA regulation so that they can help borrowers through the home buying process, as well as, understand what happens during the VA appraisal process.

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