VA Appraisals: How To Navigate Buying a Home

VA Appraisal Fees:

If you’re a military veteran or the spouse of one looking for an affordable way to secure a mortgage, VA loans offer an attractive option with minimal credit requirements and no need for a down payment. Yet, there’s a critical step in the VA loan process that might be new to you, particularly if it’s your first home purchase or you’ve previously only dealt with conventional mortgages.

Part of securing a VA loan involves covering VA appraisal fees. These fees are vital for assessing if the house you’re eyeing up meets the Department of Veterans Affairs’ strict property standards, making it eligible for a VA loan. With an increasing number of veterans tapping into this valuable benefit, the demand has pushed up both the fees and appraisal completion times in certain areas. Let’s dive deeper into what VA appraisal fees entail and whether your region is experiencing these adjustments.

Understanding VA Appraisal Fees

When pursuing a VA loan, buyers are required to pay for a VA appraisal. This assessment serves two main purposes: determining the property’s fair market value and ensuring its conditions are safe and livable according to the VA’s stringent guidelines. These guidelines cover aspects from the amount of usable living space to potential hazards or structural integrity issues. Though similar, a VA appraisal isn’t as comprehensive as a full home inspection, which is not a requirement for obtaining a VA or conventional loan.

The appraisal process kicks off once a purchase agreement is in place. Your lender will request the appraisal through the VA, which then appoints a certified appraiser to evaluate the property. While the goal is to complete appraisals within 10 business days, actual timelines can vary by state and locality, highlighting the importance of initiating this step promptly to avoid potential delays or necessary repairs holding up the loan approval.

Though the lender orders the appraisal, it’s typically the buyer’s responsibility to cover the appraisal fee upfront—unless an agreement is made where the seller pays. The cost of a VA appraisal starts around $600, fluctuating based on location and property type, including single-family homes, condos, manufactured homes, or multifamily units.

Additional Costs to Consider

Beyond the standard appraisal fee, buyers might also incur extra charges. For instance, if the VA approves, appraisers can add mileage fees to account for the distance traveled to the property. This is more common for remote locations like Hawaii, Alaska, or island territories. Should a property initially fail to meet VA loan standards, and the seller makes necessary repairs, appraisers may charge an additional $150 for re-inspection. There’s also a possible $50 fee for properties that are either proposed or under construction.

Adjustments to VA Appraisal Fees and Completion Schedules

The Department of Veterans Affairs has noted a significant surge in the demand for appraisal services, prompting an adjustment in both the costs associated with VA appraisals and the time allocated for their completion. In regions experiencing particularly high demand, appraisal fees have been raised, and appraisers are afforded additional time to finalize their reports. These adjustments are not set in stone; they will be revisited as the market’s demand for appraisal services fluctuates and based on the availability of appraisers in areas with high demand.

Identifying High-Demand Regions

Areas identified as high-demand, which are subject to these increased fees and extended timelines, are listed on the VA’s official website. These locales often include rural counties characterised by a scarcity of VA-approved appraisers and considerable distances between properties, factors that contribute to delays in completing appraisal reports timely.

Protocol for Cancelling VA Appraisal Assignments

In instances where a VA appraisal assignment needs to be cancelled, it falls upon the lender to inform both the assigned appraiser and the VA. The compensation owed to the appraiser for cancelled assignments is determined by the VA and is structured as follows:

• A maximum fee of $50 is permissible if the appraiser was assigned but had not yet scheduled the appraisal appointment at the time of cancellation.
• A fee not exceeding $175 is allowed if the cancellation occurs after the appointment date has been established.
• If the property assessment was completed but the appraisal report was not, the appraiser may charge up to 50% of the assigned appraisal fee.
• Should the appraiser complete the full appraisal report and upload it to the VA’s online portal, they are entitled to charge the full appraisal fee.

Key Takeaways Regarding VA Appraisals

Mandatory for obtaining a VA loan by military veterans or their surviving spouses, VA appraisal fees are crucial, albeit distinct from a comprehensive home inspection. Their primary objectives are to establish the fair market value of a home and verify its safety and habitability for the purchaser.

The cost and timeline for a VA appraisal can vary depending on the property’s location, with fees recently adjusted upwards around $600 due to heightened demand for appraisal services. It’s advisable for potential borrowers to visit the VA’s website to determine if their county is among those affected by these increases.

For those considering a VA loan, initiating the mortgage approval process promptly is recommended.