Hawaii VA Loans

As usual, the answer to that question isn’t so simple;  yes and no.  Appraisals are appraisals, they look at the property, compare it to others and determine a value.  That can be said for VA appraisals as well; however, there are some nuances that do make VA appraisals different.

The differences start with the ordering process.  VA appraisals are not ordered directly from the appraiser like they are in the conventional loan process.  The lender must order the appraisal through the ‘VA Portal’.  At that point, an appraiser approved with the local VA office is randomly assigned the job.  The lender must provide the fully executed purchase contract (with all addendums and counteroffers) before the appraisal is started.  For condos, the lender must provide the budget, minutes, financials and condo disclosures before the appraisal can start.  That is why it is important for all parties involved to make sure those documents are provided as soon as possible.  The appraiser then has 5 business days to inspect the property (assuming cooperating parties can provide access within that timeframe) and another 5 to complete the report.  Once completed, the appraisal is uploaded into the VA Portal where the appropriate party can review it.

As far as reviewing the appraisal goes, there are two types of lenders, LAPP approved lenders, which we happen to be, and non-LAPP approved lenders.  A LAPP approved lender has underwriters that have been given the authority by the VA to review the appraisal and issue the ‘NOV’ or Notice of Value, which is the final determination of the property’s value.  If the lender is not LAPP approved, the appraisal goes to the VA for review and issuance of the NOV.

One vital difference, and one that can be quite valuable for all parties involved, is the rebuttal process. Contrary to some rumours, this process really helps sellers to be treated fairly.  If the appraiser knows that the value is going to come in below the purchase price, he will issue a notice along with an indication of the comparable properties he used to make his determination.  The notice provides a two business day period for additional evidence to be provided to support the purchase price.  Of course, it is the appraiser’s sole discretion that determines his result.  We recently came across this exact situation, and it saved the deal.  The buyers believed they were getting a fair price, as did the sellers.  By providing alternate comps, the appraiser was able to re-evaluate his determination, and provide an appraisal that could supported strongly enough to obtain the NOV and maintain the sale price.  It can be as simple as using a comparable that was an ‘interior’ lot with little view when a more similar lot with a better view would be more representative of the value.  Using an ‘interior’ lot would require large adjustments to the value to compare apples to apples, when the use of the other property wouldn’t.

Now, because this loan program is designed for veterans, there are safeguards built in to help insure that they are buying a home that is in good condition.  Some have commented that the VA appraisals can be ‘nit-picky’ but it is all for the benefit of the veteran.  For the most part, these little issues can be addressed and solved by the realtors without much fuss.  Chipped paint or a missing closet door, may not seem like something an appraisal should point out, but it also isn’t something that would cause a deal to be thrown away.  Things like these will need to be addressed, but in a common sense manner.  Chipped paint in a small area will not require the whole house to be repainted.  A little perspective and relaxed communication can usually solve any of these problems.

There are also some specific rules about comparable property selection, especially within a condo project.  Comparables within the project must be evaluated before those in a different project, common sense, really.

That’s a lot of information to cover, but hopefully having too much information will ease tensions better than having too little.

Related posts:

1. Appraised Value Came in Low. What’s Your Options? So, you found your dream home, got your accepted...
2. Top 5 Mistakes a Realtor Should Avoid on a VA Transaction Okay, so you’re a Realtor and you run into...

Related posts brought to you by Yet Another Related Posts Plugin.