What Is a Tidewater Appraisal and How Does It Work?
Learn about the Tidewater Appraisal process. Understand how this key valuation step addresses property value concerns in real estate transactions.
Buying or selling a home involves a property appraisal, which assesses its market value. This valuation helps lenders determine how much they will finance. While most appraisals follow a standard procedure, certain situations trigger a specialized protocol: a Tidewater Appraisal. This initiative addresses concerns during the valuation process, ensuring fairness and protecting the interests of all parties in specific loan agreements.
Defining Tidewater Appraisal
A Tidewater Appraisal is a communication protocol initiated by an appraiser during the appraisal process. Its purpose is to address potential discrepancies when an appraiser’s initial assessment suggests the property’s value may be lower than the contract price. This provides a mechanism for the appraiser to communicate these preliminary concerns before finalizing the report.
The Tidewater initiative protects lenders and borrowers from overpaying for a property. If a home is valued for less than the purchase price, the lender typically finances only up to the appraised value, leaving the borrower responsible for the difference. The protocol aims to mitigate this by allowing additional information to be considered, potentially leading to a more accurate valuation that supports the sales price.
When the Tidewater Initiative Comes Into Play
The Tidewater Initiative is primarily associated with home loans backed by the Department of Veterans Affairs (VA). It is used when a VA-approved appraiser believes the appraised value may be lower than the purchase price. This can arise if comparable sales data does not adequately support the contract price.
When an appraiser’s preliminary assessment indicates a potential value discrepancy, they notify the lender that the Tidewater protocol is invoked. This notification signals that the property’s value appears below the negotiated sales price. The goal is to give interested parties an opportunity to provide additional market data before the final appraisal report is issued.
Navigating the Tidewater Process
Once an appraiser invokes the Tidewater Initiative, the process becomes a collaborative effort for a fair and accurate valuation. The appraiser notifies the lender, who then informs involved parties, such as the buyer’s and seller’s agents. This signals an opportunity for the selling agent or seller to provide additional comparable sales data or other relevant information that might support the contract price.
Parties generally have a limited timeframe, often around 48 hours, to submit supporting information to the appraiser. This data should include recent sales of similar properties not readily available to the appraiser during their initial review. The appraiser then reviews the newly provided information and considers its impact on the property’s value.
After reviewing the additional data, the appraiser will finalize the appraisal report. The outcome can vary: the appraiser may confirm their initial value concern, or adjust their valuation based on new comparables, potentially increasing the appraised value. If the appraised value remains below the purchase price, the buyer may need to negotiate a lower price, cover the difference in cash, or the transaction may not proceed.