What Does a VA Appraiser Look for During an Appraisal?

A VA appraisal serves as a crucial step for individuals utilizing a VA home loan to purchase a property. This assessment determines the home’s market value and ensures it meets specific requirements for VA financing. A VA appraisal is distinct from a home inspection, which offers a more detailed review of a home’s overall physical condition. The appraisal process is designed to protect both the veteran homebuyer and the lending institution by confirming the property represents a sound investment and is suitable for habitation.

Understanding Minimum Property Requirements

The Department of Veterans Affairs (VA) has established Minimum Property Requirements (MPRs) that a home must satisfy to qualify for a VA loan. These standards ensure the property is safe, structurally sound, and sanitary for the veteran and their family. MPRs prevent homebuyers from acquiring properties that might require extensive, unforeseen repairs immediately after purchase.

MPRs cover general categories that contribute to a property’s livability. The home must provide adequate living space for daily functions such as sleeping, cooking, dining, and maintaining hygiene. Mechanical systems, including electrical, heating, and plumbing, must be functional and safe. The property must also be free from health and safety hazards that could endanger occupants or compromise the dwelling’s structural integrity.

The VA appraiser evaluates the property against these MPRs. This evaluation ensures essential utilities are in working order, the roof and foundation are sound, and water and sewage systems are adequate. While the appraiser notes readily apparent repairs needed, their role differs from a comprehensive home inspector who performs operational checks of mechanical systems and appliances. MPRs ensure veterans secure homes that are fundamentally sound and ready for occupancy.

Key Structural and Safety Evaluations

The VA appraiser primarily focuses on the structural integrity and safety elements within the property. The foundation is a primary concern, as appraisers look for signs of major failure, active leakage, or movement that could compromise the property’s stability or value. Issues such as significant cracks, settlement problems, or excessive dampness in basements and crawl spaces must be addressed. Basements and crawl spaces need to be dry, clear of debris, and properly ventilated.

The roof’s condition is also evaluated. It must be free of active leaks or water damage signs and provide reasonable future utility. Appraisers will note any visible defects like missing shingles, holes, or obvious signs of wear that suggest it cannot adequately protect the dwelling. If the roof’s remaining functional life is less than a few years, repairs or further certification may be required.

Heating and cooling systems are evaluated to ensure they are functional and capable of maintaining a habitable temperature. The property must be able to maintain a temperature of at least 50°F in all areas with plumbing. If a heating or cooling system is installed, it must be operational, or the appraisal may be subject to repairs. Electrical systems are checked for safety, including the absence of exposed wiring, overloaded circuits, or damaged electrical panels, and must meet safety standards.

Plumbing systems must be intact and provide hot and cold water at fixtures, with no active leaks or signs of water damage. The appraiser verifies the property has a continuous supply of safe, potable water. Proper sanitary facilities and a safe method of sewage disposal are also required. Any defective conditions caused by poor craftsmanship, pest damage, or deferred maintenance that affect the dwelling’s safety, sanitation, or structural soundness must be corrected.

Site, Access, and Environmental Considerations

VA appraisers also assess external factors and site-specific issues. Proper drainage around the property is evaluated to prevent water damage to the foundation and ensure the site is not subject to regular flooding. The appraiser will report any potential instability due to topographic conditions, such as mudslides or falling rocks, or readily observable soil conditions that could affect the property’s value or safety.

Safe and year-round access to the property is required, typically via a public or private street with an all-weather surface. If the property relies on a private road, it must be protected by a permanent easement and maintained by a homeowners association or joint maintenance agreement. Adequate space for personal property and vehicles is also considered. The property must be accessible without trespassing on adjoining properties.

Environmental health and safety hazards are assessed by VA appraisers. Properties built before 1978 are assumed to have lead-based paint, and any chipping or peeling paint must be addressed due to the risk of lead exposure. The presence of asbestos or hazardous materials like radon gas is noted. Evidence of wood-destroying insects, fungus, or dry rot must be noted and repaired.

For properties utilizing individual septic or well water systems, these must be adequate and not endanger public health. Well water must be potable and meet local health authority standards, and individual sewage disposal systems must operate properly. Any significant defects or hazards affecting the property’s habitability, soundness, or value, such as extensive water damage or pest infestations, can lead to a failed appraisal.

Determining Property Value

A primary role of the VA appraiser is to determine the property’s fair market value. This valuation is important because the lending institution will typically finance whichever is less: the appraised value or the purchase price of the home. The appraisal establishes the maximum loan amount the VA will guarantee for that specific property.

To arrive at the market value, the appraiser primarily uses the “sales comparison approach.” This involves selecting at least three recently closed sales of comparable properties, or “comps,” that are similar in size, age, and location to the subject property. These comparable sales should have occurred within the last six months and be in close proximity to the property being appraised.

The appraiser then makes adjustments for differences between the comparable properties and the subject property. For example, if the subject property has a feature that a comparable property lacks, a positive adjustment is made to the comparable’s value. Conversely, if the comparable property has an amenity the subject property does not, a negative adjustment is applied. These adjustments account for variations in features such as the home’s size, number of bedrooms and bathrooms, construction quality, and the presence of garages, porches, or decks.

The appraiser uses this adjusted data to assign a final “indicated value by sales comparison approach.” This valuation process ensures the veteran is not overpaying for the property and that the loan amount is justified by the home’s market worth. The appraisal report, known as a Notice of Value (NOV), includes the estimated value and any required repairs to meet VA standards.