Oh No, My VA Appraisal Came in Low!



Low appraisals are bad news for everyone, but the process is a little bit more complicated for veterans. Luckily, you do have a few options.

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What do you do when your VA appraisal comes in low? 

Low appraisals are the bane of my existence. First, though, it’s important that you know about the Tidewater Initiative. 

Your lender or buyer’s agent will let you know when the appraiser invokes tidewater. This has nothing to do with floodplains or your ability to purchase the home. The Tidewater Initiative simply means that the appraiser believes they will come in low on the report. Through the Tidewater Initiative, you will know ahead of time. The agent then has 72 hours to provide additional comps in order to help the home come in at the agreed-upon value.

Once the appraiser completes their report, they’ll submit it to the VA. The VA will underwrite the appraisal and issue your notice of value, or N.O.V. That’s when we know what the value is and what kind of financing the veteran can obtain. If the notice of value is lower than the contracted purchase price, then we have a problem because a VA loan needs 100% financing.

At this point in time, your agent can request a reconsideration of value. There is a formal process for this, but basically the reconsideration of value checks to see if the appraiser made any mistakes or miscalculations. After all, appraisers are human and humans make mistakes. Realtors put information into the MLS and it’s up to the appraiser to decipher it; mistakes can be made. 


Your agent can request a reconsideration of value.

During the reconsideration of value, we may also find other comparables in the report that weren’t initially used to justify the purchase price. 

There are no guarantees that the reconsideration of value will actually work. You need solid evidence to support the case. I’ve done a few of these successfully, and the biggest one was a $10,000 upswing. I had to find photos, comparable sales, and have the buyer write a letter. It can be a lot of work to get those reconsiderations through. 

If the reconsideration fails, you are stuck with three options: 
  1. Ask the seller to lower the purchase price. As the buyer, you are protected by the VA loan. You can get out of the deal and get your earnest money back if the seller doesn’t agree to lower the price, which kind of forces the seller’s hand. 
  2. Make up the difference in cash. You and the seller can meet in the middle or you can make up the difference on your own. If you are able to put up to 5% down, you can lower your VA funding fee.
  3. You can walk away from the deal. Unfortunately, you may have lost some time, energy, and money on things like inspections during this transaction. On the bright side, your earnest money is protected. 
A low VA appraisal can be a disastrous surprise, so make sure you work with an agent who is trained in VA loans and can perform a market analysis prior to making an offer on the home. Your agent should also know the reconsideration process. 

If you have any other questions about this process, just give me a call or send me an email. I would be happy to help you!

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