Open Communication and VA Loans
The VA Home Loan Guarantee Program is working hard to increase communication between appraisers, buyers, and sellers. In the past the VA has limited interaction between these groups because of possible conflicts of interest. Now there is more open communication which allows for a faster and smoother appraisal process.
There are many positive reasons for allowing open communication between the appraiser, seller, and buyer in the VA Home Loan Program. Some of these reasons include:
- The seller can explain improvements and upgrades to the home and the property that the appraiser may otherwise overlook.
- The buyer can communicate with the appraiser regarding the amount the bank wants the home to appraise for in order to close the mortgage loan. The VA specifically states that in no way is this supposed to influence the appraiser's value on the home. An appraiser should always base the fair market value for a home on the truth and not feel pressured to change the price for any reason.
- This decreases the amount of Reconsideration of Values that the VA has to process. When a home is appraised and a buyer or seller has a discrepancy about the appraisal price, they can request a reconsideration of value from the appraiser. By allowing open communication between the appraiser, the buyer, and the seller, reconsideration of value is usually not necessary.
- The appraisal process is faster due to the open communication.
For many participants in the VA Home Loan Guarantee Program, the appraisal can be a difficult time. If the appraised value of the home is lower that the loan from the lender, the potential buyer may not be able to get the loan to purchase the home. That is why it is very important to have open communication between the appraiser, buyer, and seller through the process of determining the value of the home.
An appraiser basically looks at the size, condition, features, and upgrades of the home. Then they compare the home to other homes that are for sale or recently sold in the same area. This gives the appraiser a general price the hose would cost for the current fair market value. Since appraisers see many different homes, it is always beneficial for the appraiser to talk to the seller and find out all of the features of the home that would increase the value. By doing this the appraiser, buyer, and seller can definitely save time and get the appraisal for the correct value the home is worth.
The buyer should also discuss the fair market value of the home with the appraiser. In order to get the mortgage loan the home must appraise for an amount above the loan value. Therefore, if the home appraises lower, the bank will not lend the buyer the money to purchase the home. On the other hand, if the appraiser places the fair market value too high, the buyer could pay more than the fair price for the home which is a bad investment.
The best way for the appraisal process to work is to keep it neutral. The Department of VA allows appraisers, buyers, and sellers to communicate in order to streamline the process and make it easier for everyone involved. There communication should in no way affect the appraiser, and all of the information on the property should be purely factual regarding the perks of the home in order to protect both parties involved.
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