VA appraisals

VA Appraisals: A Reader Question

September 23, 2014

VA Appraisals: A Reader Question

017-logoA reader asks, “I recently closed on my VA Approved Loan on August 29, 2014. When the VA Inspector came to appraise the home, he found two (2) minor repairs needing done plus he appraised the home lower then the sellers’ asking price. The 2 minor repairs were done by the sellers and I got the house for the VA appraised price.

My insurance company (USAA) had an agent come out to appraise the house in case of accident. He found that the home has Knob and Tube wiring. USAA stated that the Knob and Tube Wiring must be replaced prior to May, 2015 or they will no longer insure me. Why did the VA Inspector NOT find the fault with the Knob and Tube Wiring when he did his inspection? He found two very minor faults but Failed to find this costly Knob and Tube wiring.

Since it was the failure of the VA Inspector to find this fault, would it not be the responsibility of the VA to “make things right” and pay for the cost of having the Knob and Tube wiring replaced in my home?”

The short answer to this reader question is no. It would not be the responsibility of the VA to “make things right” and pay the cost of replacing the wiring in the reader’s home. But WHY is the answer no?

The VA official site, as well as the VA Lender’s Handbook (VA Pamphlet 26-7) states in no uncertain terms that a VA appraisals are NOT a home inspection. VA appraisals do not serve as a stamp of approval on a home nor a guarantee that a home is free from defects.

In fact, the VA official site encourages borrowers to get a home inspection–which is the borrower’s responsibility and NOT a requirement of the VA loan approval process–in addition to VA appraisals. Just because a home passes the appraisal process or gets loan approval on the condition that certain repairs or corrections are made does not equal a VA guarantee that the home is perfect.

Let’s examine what the VA official site (www.VA.gov) says on this issue, in a section titled, “What Can VA Not Do?”

“What can VA not do?

Guarantee that a home is free of defects. VA guarantees only the loan. It is your responsibility to assure that you are satisfied with the property being purchased. The VA appraisal is not intended to be an “inspection” of the property. You should seek expert advice (a qualified residential inspection service), as necessary, BEFORE legally committing to a purchase agreement.

If you have a home built, VA cannot compel the builder to correct construction defects although VA does have the authority to suspend a builder from further participation in the home loan program.

VA cannot guarantee that you are making a good investment. VA cannot provide you with legal services.”

That is essentially the final word on the subject, direct from the VA official site.

Do you have questions about VA home loans? Ask us in the comments section.

4 Comments
  1. Corwin Macklin

    I recently purchased a home in June 2014 in the Annapolis, MD area. I was not comfortable with the Appraisal report and how the VA inspector decided on the house comparables for the area applied against the house I purchased. Is there any recourse that I might have to appeal the Appraisal report at this late stage?

    • Joe Wallace

      It seems unlikely, but you can call the VA directly at 1-800 827-1000 to see what they might recommend.

  2. Lisa Stratton

    Can you provide the guidelines that a VA appraiser would use for comparables to appraise our home. We recently had an appraisal from another company and the VA appraiser figure was $ 70,000 lower than another appraiser. We were told by the lender they can only use comparables within 1 mile distance of your home and if comparables regarding age and square footage are not available they will use a lower figure based on home sales where homes are smaller have less amenities and structual improvements etc. Do we have any recourse? Thank you

    • Joe Wallace

      Contact the VA Regional Loan Center with jurisdiction over your area for assistance--find yours at http://www.benefits.va.gov/homeloans/contact_rlc_info.asp

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