To pass a VA appraisal, sellers must fix common issues like peeling lead-based paint, damaged roof shingles, faulty heating, exposed wiring, and pest infestations. VA loans have stricter property requirements than conventional loans but offer benefits like no down payment. Sellers can prevent delays with pre-inspections and agent collaboration, while buyers can negotiate repairs, request a reconsideration, or use a VA renovation loan.
Understanding the VA Appraisal Process
The VA appraisal serves two primary purposes:
- Determining Market Value – Ensuring the home is priced appropriately for the loan amount.
- Assessing Minimum Property Requirements (MPRs) – Evaluating the home’s safety, structural integrity, and livability.
Unlike a standard appraisal, the VA appraisal adheres to specific guidelines set by the U.S. Department of Veterans Affairs to protect veterans from purchasing unsafe or overpriced properties.
Common Reasons Homes Fail VA Appraisals (and How to Fix Them)
1. Safety Hazards
The VA prioritizes safety, and any hazards that could harm occupants will cause a home to fail appraisal.
Common issues:
- Peeling lead-based paint (for homes built before 1978)
- Faulty wiring or exposed electrical systems
- Missing or non-functional handrails on staircases
- Broken windows or unsecured doors
- Trip hazards like loose flooring or uneven walkways
How to Fix:
- Repair electrical issues and replace faulty wiring.
- Scrape and repaint any peeling paint with lead-safe materials.
- Install or fix handrails, steps, and other safety-related structures.
- Secure doors and windows to ensure they function properly.
2. Structural Problems
A home must have a sound structure to pass the VA appraisal.
Common issues:
- Cracked foundation or visible water damage
- Roof leaks or missing shingles
- Termite infestations or pest damage
- Unstable decks, porches, or additions
How to Fix:
- Repair foundation cracks with professional assessments if necessary.
- Replace damaged roof shingles and ensure no leaks are present.
- Treat for termites and repair any affected wood.
- Reinforce or rebuild unstable structures.
3. Plumbing and HVAC Deficiencies
A home must have a functional plumbing, heating, and cooling system.
Common issues:
- Leaking pipes or faulty plumbing fixtures
- Non-functional heating or cooling systems
- Inadequate water pressure or poor drainage
- Hot water heater malfunctions
How to Fix:
- Repair or replace faulty plumbing fixtures.
- Ensure the HVAC system is fully operational with servicing or replacement if needed.
- Fix drainage issues and maintain adequate water pressure.
4. Inadequate Access and Utilities
The home must have year-round access and essential utilities.
Common issues:
- Private roads without a recorded maintenance agreement
- No connection to public water, sewer, or alternative approved systems
- No access to the property taxes by a public or private road
How to Fix:
- Obtain a recorded road maintenance agreement if on a private road.
- Ensure the property has access to an approved water and sewage system.
5. Pest and Environmental Issues
VA appraisers check for environmental hazards that could impact a home’s safety.
Common issues:
- Mold growth or significant water damage
- Radon exposure in basement areas
- Infestation of wood-destroying pests (termites, carpenter ants)
How to Fix:
- Remove mold professionally and address underlying moisture problems.
- Conduct radon testing and install mitigation systems if necessary.
- Treat for pests and repair affected areas.
What Happens If a Home Fails the VA Appraisal?
VA loans require no down payment or private mortgage insurance (PMI), lowering monthly payments. A good credit score helps secure better interest rates for buyers. If the appraisal identifies issues, the buyer and seller have options:
1. Seller Repairs
The seller may agree to fix the deficiencies before closing. This is often the simplest solution, especially for minor repairs.
2. Price Negotiation
If the appraised value is lower than the purchase price, the seller can reduce the price or the buyer can pay the difference out-of-pocket.
3. Reconsideration of Value (ROV)
If the buyer believes the home is worth more, they can request a formal reconsideration of value with additional supporting data, such as comparable sales.
4. VA Renovation Loan Option
If the home requires extensive repairs but the buyer is willing to take on the project, a VA renovation loan may cover the necessary fixes.
5. Walk Away
If the repairs are too costly or the seller refuses to fix the issues, the buyer may have to find another property.
Proactive Steps to Avoid VA Appraisal Issues
The best way to ensure a smooth VA loans appraisal process is by preparing ahead of time. Here are some proactive steps buyers, sellers, and agents can take:
✔ Pre-Inspect the Home: Identify potential issues before the VA appraisal.
✔ Work with a VA-Savvy Agent: An experienced real estate agent can help find homes likely to pass VA guidelines.
✔ Communicate with the Seller: If issues arise, discuss possible repairs before abandoning the deal.
✔ Ensure a Clear Title: Confirm there are no outstanding liens or disputes on the property.
✔ Consider a Home Warranty: A home warranty can cover some unexpected repairs if issues arise post-purchase.
Common Misconceptions About VA Appraisals
There are many myths surrounding VA appraisals that can cause unnecessary confusion. Here are some key clarifications:
❌ Myth: VA appraisals are more difficult than conventional appraisals.
✅ Fact: VA appraisals follow strict guidelines, but they are not necessarily harder to pass. They ensure veterans buy safe homes.
❌ Myth: VA loans require the seller to pay for repairs.
✅ Fact: The seller is not required to pay for repairs. It is negotiable between the buyer and seller.
❌ Myth: A low VA appraisal automatically kills the deal.
✅ Fact: There are multiple solutions, including negotiation, reconsideration of value, or using a VA renovation loan.
Conclusion
Failing a VA appraisal doesn’t have to mean losing your dream home. By understanding common issues and how to fix them, buyers, sellers, and real estate professionals can navigate the process effectively. If you’re considering a VA loan, working with knowledgeable professionals and being proactive can ensure a smooth and successful home purchase.
For more insights on home buying, VA loans, and real estate investment strategies, check out our related articles or consult a VA-approved lender today!