Here at National VA Loans we often get the question does the VA require a home inspection. As one of the VA home loan requirements a VA home inspection is required. The VA has a very specific appraisal process in order to qualify for a VA home loan. But what about a home inspection? What is the difference between a VA appraisal and a VA home inspection? Many people dread the VA appraisal, and as a result they have similar feelings about home inspections. But there is one important difference between a VA appraisal and a home inspection. The appraisal is required by the VA so they know the property you are about to buy meets both fair market value and minimum property requirements. The key word being minimum. A home inspection benefits you even more. A professional, insured and licensed home inspector goes above and beyond the minimum required by the VA. They will point out any concerns before you close on the house so you know exactly what you’re getting when you purchase your new home. While a VA appraisal is required for lending purposes, a home inspection is entirely optional.
The VA Appraisal ProcessLet’s take a look at the appraisal. When you apply for your loan, the lender will send a request to the VA for an official appraisal. The appraiser is an independent third party specifically licensed to perform a VA appraisal. The appraiser is assigned to your case by the VA, and the finished appraisal should be done within 10 business days. Often people dread the appraisal. There is always the fear that they’ll find something to impede moving forward with the financing. As frustrating and heartbreaking as that can be if it happens, it’s usually for the best. The last thing you want to do is wind up with a house that will cost you a fortune in repairs within a few years.
The appraiser will follow a VA appraisal checklist when determining the fair market value of your potential new home. The other part of the assessment is to certify the property meets VA outlined minimum property requirements. The method of outlining the minimum property requirements is also called a compliance inspection, or sometimes a VA state inspection. This is probably where some of the confusion comes from when people think of an appraisal versus a home inspection. The VA wants assurance that the home you are about to buy is safe and comfortable. This makes sense when you consider that they guarantee the loan on your behalf.
The VA Home Inspection Process
The first thing the VA looks for is that the home has basic property access. It must be accessible from a public or private street, and that street must have an all-weather surface. You must be able to get to it without having to trespass on any other property. There also must be enough space around the unit to allow repair of exterior walls if necessary.
They will also consider the characteristics of the property. It must be mostly residential, and any non-residential use must be limited to 25% of the property. The sanitary facilities must be in good working order and provide appropriate living and sleeping areas. There must be adequate conveniences for you to cook and dine in comfort. You must be able to show that you have safe drinking water. If your new home has a private well, further testing will be required to make sure you meet this guideline. If the house was built prior to 1978, any peeling or flaking paint will raise questions about lead paint. These areas will need to be scraped down and repainted, or drywall will need to be installed to cover the problem areas.
If you live in a cold weather climate, a heating system will be required that is capable of maintaining a temperature of at least 50 degrees within the home. The electricity must be functioning and in good condition. The roof needs to be in reasonable condition and prevent moisture from entering the home. The roof must also show that it has an acceptable amount of life left. The VA purposely leaves that vague so the final determination is up to the appraiser. A pest inspection will also be done, showing the home is free from termites, carpenter ants, carpenter bees or dry rot.
There are certain conditions that often cause a property to fail a VA compliance inspection. Mold and mildew can be hazardous to your health, so this is something your appraiser will be on the lookout for. Exposed wires will bring into question the soundness of the electrical system. Windows must be airtight yet able to open to allow for proper ventilation. Water stains on the ceiling can point to a leaky roof. And for obvious reasons, a non-working furnace will definitely wreck your appraisal. Again, anything that points to the house not being fit to live in safely and comfortably will be a red flag during your appraisal.
It can be stressful if your house fails to pass the minimum property requirements. Don’t lose heart, because you do have options if that situation arises. You can negotiate with the seller to fix the issues keeping you from obtaining financing. You could also pay for the repairs yourself. This is not a popular option, as the repairs will have to be made prior to re-appraisal. Since you do not own the house yet, it’s a risky endeavor. You may not be able to recoup the money spent on repairs if the sale falls through for another reason down the road. In the end, the VA simply wants you to have a home that is safe to live in. That is why VA appraisals are so comprehensive.
If the appraisal focuses on minimum living standards, the home inspection digs deeper. While the VA appraiser is only looking at general safety concerns, the home inspection is looking for anything that may be of concern to you down the road. By hiring a professional building inspector, you get an objective third party that will give you the low down on what’s really going on with the house your looking to buy. While it is never required, it’s rare that people opt out of having a home inspection completed.
There’s a lot of emotion involved in buying a home. There are thousands of reasons you fall in love with a house. The kitchen is perfect, and the bedrooms have enormous closets. You have extra space for a guest room AND a nursery if you are so inclined. The yard is just the right size for your chocolate lab to have run of the place. But all those things that you love about the house can be hiding some real challenging issues. You may get so attached to the new house you overlook things that you shouldn’t. A good building inspector will look at every nook and cranny and identify past, present and future issues to help you make an informed buying decision.
It’s always a good idea to include a home inspection contingency when drawing up your purchase and sale agreement. The laws differ slightly depending on where you live, but in
general, the contingency will allow for a buyer-initiated home inspection within a certain time frame after the P&S is signed. Usually it’s around 7-10 days. Having this contingency in place allows you to legally back out of the sale if the inspection uncovers something cost prohibitive. You may even want to consider having a building inspector check out the property before the VA does their appraisal. It will save you the expense of paying for another appraisal if you are forced to back out of the sale due to inspection findings.
VA Home Inspection ChecklistA good building inspector will follow a checklist and take a detailed look at the following features of the property:
· Exterior of the house (including walkways, siding, flashing and trim, decks and patios)
· Roof (including shingles, flashing, moss growth etc.)
· Gutters and downspouts
· Attic and insulation (including ventilation from exhaust fans and dryers)
· Doors and windows (including sills, sash, screens and mechanics)
· Floors and ceilings
· Steps, stairs and railings
· Fireplaces (if any)
· Smoke and Carbon Monoxide Detectors
· Foundation and floor structure
· Wall structure
· Furnace and air conditioner where applicable
· Plumbing (including hot water heater, sinks, shower and tub, drains)
· Electrical (including wiring, circuits, light fixtures, GFCI regulations)
· Rodent, termite and other pest damage evident or areas that are susceptible
· Exterior threats (such as trees too close to the house, moss on the structure, grading and drainage issues)
· Radon and lead paint testing (may be an additional cost)
Over the past 10 years, digital photography, WIFI and other technology has drastically improved the quality of home inspection reports. It’s not abnormal to receive a 50 page document complete with pictures, descriptions, recommendations and summaries for each area under examination. Having this report in hand allows you to go back to the seller with documentation of things that should be fixed before the sale proceeds. If the report uncovers major issues, you could work with the seller to renegotiate the selling price. If you are not able to come to an agreement, as long as you have the home inspection contingency in your purchase and sale agreement, you can walk away from the sale with no legal repercussions.
Don’t think that home inspections are just for older houses either. Even a brand new house can have underlying problems that you can miss at first glance. There are many tradesmen and contractors involved in building a house. Plumbers, carpenters, electricians, sheet rockers, masons, and painters just to name a few. You never know what shortcuts one or all of them
may use to get through a job quickly. In the end, a home inspection gives you peace of mind in knowing that the house you’re buying is sound. It’s more than worth it.
Many home inspectors are independent contractors, and they do not all hold to the same standards. You want to find a reputable, licensed and insured inspector that will do a thorough inspection of your potential new home. How do you go about finding the best?
If you happen to know someone who recently bought or sold a house, ask them for a recommendation. Word of mouth is still the most reliable way to hire good contractors. Your real estate agent may have some good recommendations as well. Real estate agents get to know most people in the business. They have a wealth of knowledge from past clients on which inspectors do the best job.
Another good place to check out is trade organizations. The American Society of Home Inspectors can provide you with a list of local inspectors in your area. In order for an inspector to become certified by the ASHI, they need to pass more rigorous examinations and perform a minimum of 250 professional inspections.
How Much Does a VA Home Inspection Cost?
To help you make your decision, ask for a sample inspection report. That will give you an idea of how thorough they will be. Also be sure to confirm the fee. A typical home inspection should cost between $300 and $500. Note that the VA does not cover this fee as it’s an optional service requested by you, the buyer. However, it’s to your advantage to be responsible for this fee because the home inspector should be working on your behalf. Once you make your decision, it’s also smart to be on the property when the inspection is taking place. Not only will it let you keep an eye on things, it will help you get a professional view of the property you are about to purchase.
Now you have a pretty good idea of the difference between a VA appraisal and a home inspection. They’re both important to the process, and both will contribute to your peace of mind when buying your new home. To find out more about using your VA loan benefit, our home loan specialists are available to help you in any way we can. Just call us at 855-956-4040 and we can get you started. Thank you for reading. And as always from all of us at National VA Loans, thank you for your service.