Challenging your VA loan appraisal can be scary but education in knowing how to challenge the appraisal is very important, let’s get started! If you are a military family eagerly looking to utilize your VA loan for that dream home but hit a bump in the road as the VA appraisal comes back too low, don’t worry you have options. Don’t worry, we’ve got you covered! In this comprehensive guide, we will unravel the intricacies of challenging VA loan appraisals, equipping you with the knowledge and strategies needed to navigate this process like a pro. These tools will empower you to confidently challenge low appraisals, ensuring the best possible outcome for your home purchase. So, fasten your seatbelt and get ready to embark on a journey filled with practical tips to conquer any appraisal challenges that come your way. Let’s dive right in!
What if the VA home loan appraisal comes in too low?
As a military real estate investor, you understand the value and potential of utilizing VA mortgages to fuel your investment journey. However, there may come a time when the VA home loan appraisal falls short of your expectations. But never fear, we’ve got some great tactics in our rucksack that can turn the tide in your favor!
Ask the Seller to Lower the Property Sales Price:
Engage in open and honest communication with the seller. Never be scared to ask for the military discount! Request a reduction in the sales price that aligns with the appraised value anchored against current interest rates. Negotiation skills can play a significant role in finding common ground and reaching an agreement that works for both parties and the mortgage lender.
Cover the VA Loan Appraisal Gap in Cash:
If you have available funds, consider bridging the appraisal gap by contributing additional cash. This strategy ensures a smooth transaction and avoids delays in the closing process. By providing additional cash, you can make up the difference between the appraised value and the desired mortgage amount at the best rates, allowing the purchase to proceed without a hitch.
Split the Appraisal Gap Between Buyer and Seller:
In some cases, a fair compromise can be reached by sharing the appraisal gap between the buyer and the seller. This option allows both parties to contribute and maintain a balanced transaction. By collaborating and finding a middle ground, you can bridge the gap and proceed with the mortgage process.
Get a Reconsideration of Value (ROV):
The reconsideration of value (ROV) process provides what may be one of the best avenues to pursue for contesting a low VA appraisal. Collect additional evidence such as recent comparable home sales or updates made to the property and submit a formal request for a reevaluation. The ROV process gives you a chance to present compelling data and arguments to potentially increase the appraised value, which can have a significant impact on your mortgage approval and loan terms.
What is Reconsideration of Value in VA Home Loans?
Reconsideration of value is a lifeline for military homebuyers and investors dissatisfied with their VA loan appraisal results. It allows you to contest the appraiser’s evaluation and present additional evidence to support your case. This process provides an opportunity to have the appraised value of the property reviewed and potentially adjusted, ensuring that the mortgage aligns with the true value of the home.
VA Loan Reconsideration of Value Process
The VA loan ROV process involves the following steps:
- Review the Appraisal Report: Carefully review the appraisal report to identify any errors, discrepancies, or missed details. This will help you gather the necessary information to present your case effectively.
- Gather Supporting Evidence: Compile strong supporting evidence to challenge the appraised value. This can include recent comparable home sales (comps), market trends, and any updates or unique features that may have been overlooked. Solid evidence strengthens your argument during the ROV process.
- Make a Request: Prepare a well-crafted letter or formal request, clearly explaining your concerns and presenting the supporting evidence you’ve gathered about the home. Submit this request to the appropriate department or entity handling the ROV process.
How Long Does a VA Reconsideration of Value Take?
The timeline for a VA reconsideration of value can vary. Typically, it takes a few weeks to receive a response. However, it’s important to note that patience is crucial during this process. While waiting for a decision, continue with your loan process and ensure all other necessary requirements have been met.
What if the ROV Fails?
In the event that the ROV on your future home fails and the appraised value remains unchanged, you still have options to consider. You can explore alternative solutions such as requesting a second appraisal from a different appraiser, disputing the original appraisal with strong supporting evidence, or revisiting negotiations with the seller to find a mutually agreeable solution.
VA Tidewater Policy
When a low VA appraisal is received for a property, the VA Tidewater policy is triggered. This policy ensures that the buyer is promptly notified about the low VA appraisal of the home before the appraisal report is finalized. The purpose of this notification is to give the buyer an opportunity to respond and provide additional information or documentation to support their position on the property’s value.
It’s key to understand that the VA Tidewater policy initiates the process by notifying the buyer of a low appraisal on their home, while the VA ROV process offers a formal mechanism for contesting the appraisal and presenting additional evidence. Together, these components provide avenues for the buyer to challenge a low VA appraisal and seek a fair valuation in VA loan transactions.
VA Tidewater Process
The VA Tidewater process unfolds as follows:
- Notification to the Buyer: Upon receipt of a low appraisal, the buyer is promptly informed about the situation, allowing them to take necessary action before the appraisal report is finalized.
- Buyer’s Response: Within a short timeframe, typically two to three business days, the buyer can submit additional information or documentation to support their position regarding the property’s value. This could include recent comparable sales or evidence of unique features that may have been overlooked.
- Appraisal Review: The appraiser then reviews the additional information provided by the buyer, considering it in the final determination of the property’s value.
- Seller’s Options: During this process, the seller has several options to consider. They may choose to lower the sales price to match the appraised value, negotiate with the buyer to find a middle ground, or request a review of the appraisal if they believe there were errors or omissions.
Always remember that challenging a VA loan appraisal requires patience, persistence, and a proactive approach. Stay informed about VA loan requirements and regulations, seek expert advice when needed, and assert your rights as a borrower. By implementing these pro tips, you can confidently navigate the appraisal challenge and work towards achieving a fair valuation that aligns with your investment goals.
ADPI Pro Tips
- Gather Strong Supporting Evidence: It’s crucial to gather strong supporting evidence. Invest time in researching recent comparable home sales in the property’s area to establish a realistic valuation. Look for properties with similar features, location, and condition to strengthen your argument. Additionally, document any upgrades, renovations, or unique characteristics of the property that may have been overlooked during the appraisal process. Presenting solid evidence can increase the likelihood of a reassessment of the appraised value.
- Engage a Knowledgeable Lender or Appraiser: Collaborating with a lender or appraiser well-versed in VA loans and appraisals can significantly benefit your challenge. Seek out professionals experienced in handling VA loans who can provide guidance and valuable insights. They can review the appraisal report, identify potential discrepancies, and offer expert advice on effectively challenging the appraisal. Their expertise can prove critical to build a strong case for you.
- Maintain Open Communication: Keep the lines of communication open with your lender, real estate agent, and other parties involved in the transaction. Clearly articulate your concerns about the appraisal and share the supporting evidence you have gathered. Engage in constructive dialogue to find common ground and explore potential solutions. Building positive relationships and maintaining professionalism throughout the process can foster cooperation and improve the chances of a successful resolution.
This blog was written in collaboration with our absolutely amazing DoD SkillBridge employee: Seneca