When you purchase a home, one of the conditions of the loan is that you have it appraised. Your VA loan appraisal is good for up to six months, or until the loan closes, for any type of loan that requires the VA appraisal.
The reason that an appraisal expires after six months is because the real estate market changes often, and part of what an appraiser does is use comparable sales, which are recently sold properties that are similar to the one you are looking to buy. The sales price of homes similar to the one you want may be much different than they would be if they were sold only six months later. However, if the housing market becomes volatile, and the prices have a sudden drop or skyrocket, the appraisal may not last as long. In these cases, they may only be good for up to three months.
Determining the Home’s Market Value
One of the main reasons that you are required to have a VA appraisal is so your lender can ensure you are not overpaying for the property. If your agreed-upon purchase price for the home exceeds its value, you will only receive the appraisal amount from your lender, so you will either need to negotiate a new price based on the appraisal with the seller, or find the funds to pay the difference.
For example, if the property is appraised for $150,000 but your offer is for $180,000, the lender will only give you the $150,000, you will need to renegotiate the price or get the remaining $30,000 on your own.
If the appraisal value is below your offer, you can ask the VA to give you a Reconsideration of Value, where both your lender and your real estate agent will provide more comparable sales that were not included in the original appraisal. Sometimes this will help with your appraisal, especially if it is a couple of months old, but it is not a guarantee.
Minimum Property Requirements
Another important part of the VA appraisal is to ensure that the property meets the VA’s Minimum Property Requirements, which is a list of specific things that have to be in a property bought with a VA loan.
These include that the property is residential, not commercial; that there is adequate space for cooking, sleeping, and living; the electrical and plumbing systems are safe and usable; the property has an adequate heating system; the roof is in good shape; there is access to clean water and a water heater, and a safe way to dispose of sewage; no health or safety hazards like asbestos and radon, along with no lead paint; and construction is not defective.
If the home does not meet the Minimum Property Requirements, you can ask the seller to complete the repairs. If the seller refuses, the VA may allow you to pay for these repairs, but lenders may have rules against this.
Keep in mind that the appraisal is not the same thing as a property inspection. The appraiser is not looking at everything, only what is on their list; an inspector is more thorough. Make sure you get a home inspection in addition to your appraisal.