VA Appraisals



VA Appraisals

The VA appraisal is a critical part of all VA home purchases and some types of refinances. The appraiser is tasked by VA to compare the property to the Minimum Property Requirements mandated by the Veteran’s Administration. These requirements are very similar to the requirements on an FHA or USDA loan. The other part of a VA appraisal is estimating the value of the home which impacts the maximum loan that the VA will approve.

Tidewater Initiative

The VA Home Loan appraisal process is a slightly different than other types of mortgages. Appraisal orders are submitted through the Veteran Administration’s online portal rather than through an appraisal management company (AMC). The VA then assigns the appraisal orders using a rotation of approved appraisers.

The Tidewater Initiative (or Tidewater, for short) is a procedure implemented by the Veteran’s Administration to improve communication between VA appraisers, Lenders, and Real Estate Agents. The VA recognizes that appraisers are human and occasionally might miss information relevant to a property’s value. If the appraiser has concerns about the value coming in short of the agreed price, he or she will pause the appraisal completion and request input supporting the price from the Lender and the real estate agents involved. The appraisal process on other loans does not give interested parties this opportunity.

The Typical Tidewater Process

Before finalizing the appraisal report, VA appraisers will notify the lender if they have concerns about the home’s value being less than the agreed-upon purchase price.

  1. The appraiser provides Tidewater Notice to the lender’s designated point of contact (POC).
  2. The appraiser can’t discuss details of the appraisal except to explain that the recent comparable home sales being considered don’t support the sale price.
  3. At that point, the POC has 48 hours (two business days) to provide the appraiser with additional comparable home sales, known as “comps” that support the purchase price.
  4. The Lender’s POC then notifies the real estate agents involved in the transaction and gives them an opportunity to submit data to the appraiser that supports the agreed-upon price.
  5. The real estate agents have the opportunity to submit data on 3 homes that have sold recently that support the agreed-upon price.
  6. Lender’s POC returns the data to the VA for the appraiser to review.
  7. The VA appraiser will consider the additional comps and issue the final appraisal report. If the Tidewater process doesn’t lead to a sufficient value, the appraiser is required to provide a written explanation as to why.
  8. Lender is notified when the appraisal is complete
  9. Lender’s Staff Appraisal Reviewer (SAR) reviews of the appraisal and issues a Notice of Valuation (NOV).
  10. This NOV makes the home’s value official for the VA’s purposes.
  11. The maximum VA loan is calculated based on the lesser of the purchase price or the appraised value.

If after the Tidewater process is complete, the appraisal still comes in “short” of the purchase price, buyers can seek a more formal appeal through what’s known as a Reconsideration of Value (see below).

Tidewater Tips for Real Estate Agents

If you are a Real Estate Agent addressing a Tidewater request, here are our top tips for completing the Tidewater process:

  1. Timeline: You have 48 hours (or 2 business days) to provide comps to the lender who will, in turn, submit them to the appraiser. We highly recommend providing the comps within 24 hours so that your lender has time to review them and send them to the appraiser by the deadline. If the compas are not provided within the allotted time, the appraiser will complete the appraisal and return it to the lender. There is no additional opportunity to have the appraiser review additional comps after the deadline has passed.
  2. Use the Correct Paperwork: There is a very specific form that has to be completed to submit to the VA Appraiser. They will not accept comp reports generated out of the MLS or other sources. Click here to download the official VA Tidewater Grid. This Tidewater Worksheet can also be helpful.
  3. Use the Best Comps: You will be asked to provide the three (3) best comparable sales. Here are our best tips for finding the best comps:
    • Closed Listings: Appraisers are looking for sold homes rather than active listings. Pendings are typically not considered unless there are no other comps available. If pending contracts are submitted to support a time adjustment, they must be completed with all contract addendum attached.
    • Proximate Listings: The appraiser will typically choose comps that are in the same subdivision and of similar in size and design if they are available. If there are no similar comps in the same subdivision, the appraiser will attempt to find similar homes within a 1-mile radius… the closer the comp, the more likely it will be considered by the appraiser.
    • Recent Sales: The appraiser will typically give the most weight to homes that have closed in the last 6 months. The more recent the sale, the more likely the comp will be considered by the appraiser.
    • Similar Properties: The appraiser will also be looking at the properties that are most similar in size, type, and design. The fewer the differences the better from an appraiser’s perspective.
    • Argue Your Case in the comment section! Once you find the best comps, the Tidewater Initiative gives you an opportunity to provide notes about differences that impact desirability and value such as location (e.g. busy road vs. cul-de-sac), materials used (e.g. granite counters vs. laminate), lot size, property type (e.g. stick-built home vs. manufactured home) finished square footage (vs. unfinished bonus rooms), outbuildings, condition of the property, date of last remodel or updates and more. Be sure to pick the best comps and then explain why the subject property is superior and worth more if the other comps sold for less.

Tidewater is happening more often in the current market than ever before. Why is this? Appraisers look backward at homes that have already sold to estimate value. In markets where home values are rapidly increasing, this can sometimes make their job difficult.

The Reconsideration of Value

If after the Tidewater process is complete, the appraisal still comes in “short” of the purchase price, buyers can seek a more formal appeal through what’s known as a Reconsideration of Value. The VA recognizes that appraisal mistakes can happen. Value-adding features can be overlooked or suitable comps may have been left out. Appraisers might have made a mistake calculating square footage or used a comp in the original appraisal that isn’t truly comparable (maybe recent renovations weren’t known or factored into the equation).

That’s why the VA set up an appeals process known as the Reconsideration of Value.

The ROV is certainly no guarantee of good results. But it does at least give buyers a shot at a higher appraisal value and a successful VA purchase.

Generally, with the help of your real estate agent, lenders will be looking to document:

  • Comps not used in the initial appraisal. You can submit up to three recent comparable home sales that weren’t included in the appraisal and that closed prior to the appraisal report’s effective date. This information needs to be inputted into a Reconsideration of Value grid, and you’ll need to include printouts from the Multiple Listing Service (MLS) for each of the comps Also, write a brief summary of why these comps are better than the ones used by the VA appraiser.
  • Evidence of errors. Have your agent scrutinize the original appraisal report. Does the report contain faulty information? Were old sales used? Are all comps similar to the subject home in size, age, and condition? You’ll need both a narrative summary outlining the perceived problems and evidence to support your claims.
  • A letter from the borrower. This is a written request for the Reconsideration of Value along with the borrower’s thoughts on why the appraised value should be increased and what they think the value should be. The

The first stop for an ROV is with the lender. Typically, a Staff Appraisal Reviewer (SAR) will review the reconsideration request and, if it has merit, send the documentation to the appraiser or to the appropriate VA Regional Loan Center.