Navigating the VA loan process can be complex, especially when faced with a low appraisal. A low appraisal occurs when the appraised value of a property is less than the agreed-upon purchase price. This situation can create challenges for both buyers and sellers, but understanding the intricacies of VA loan appraisals, reasons for low appraisals, and the options can help mitigate potential issues.

Important points

  • VA appraisals are not the same as property inspections; they primarily assess market value and basic property conditions.
  • Common reasons for low VA appraisals include discrepancies between market value and asking price, property condition issues, and non-compliance with VA Minimum Property Requirements.
  • After a low appraisal, buyers can negotiate with the seller, request a reconsideration of value, or cover the appraisal gap in cash.
  • Challenging a low VA appraisal involves submitting a reconsideration of value request, gathering supporting evidence, and understanding the outcomes.
  • You can achieve the prevention of low appraisals by choosing the right property, working with experienced professionals, and understanding current market trends.

Understanding VA Loan Appraisals

Role of the VA Appraiser

The VA appraiser’s primary responsibility is to establish a fair market value for the property and ensure it meets the VA’s Minimum Property Requirements (MPRs). They will inspect various aspects of the home, including attics, crawl spaces, and water supply, to ensure the property is free of termites, dry rot, and lead-based paint. If the property meets the MPRs, the VA loan process can proceed. Otherwise, the property may not qualify for a VA loan.

Difference Between Appraisal and Inspection

While both an appraisal and an inspection involve evaluating a property, they serve different purposes. An appraisal determines the market value of the home and ensures it meets VA and lender guidelines. In contrast, an inspection is a more detailed examination of the property’s condition, including mechanical, electrical, and plumbing systems. It’s important to note that an appraisal is not a substitute for a home inspection.

Common Issues Found During Appraisals

During a VA appraisal, the appraiser may identify several common issues, including:

  • Structural problems, such as foundation cracks or roof damage
  • Health hazards, like mold or lead-based paint
  • Safety concerns, including faulty wiring or plumbing issues

To meet the VA’s MPRs and move forward with the loan process, we must address these issues.

The VA appraisal process is a crucial step toward homeownership for veterans. It ensures that the property is worth the investment and meets safety and health standards.

Reasons for a Low VA Appraisal

Market Value vs. Asking Price

One of the most common reasons for a low VA appraisal is a discrepancy between the market value and the asking price of the property. Sellers often overestimate their home’s worth because of emotional attachment or lack of market knowledge. This can lead to an inflated asking price that does not align with comparable sales in the area.

Property Condition Concerns

The condition of the property plays a significant role in the appraisal process. Issues such as outdated systems, structural problems, or visible damage can negatively affect the appraised value. Appraisers are required to note any deficiencies that could affect the property’s livability or safety.

Compliance with VA Minimum Property Requirements

The VA has specific Minimum Property Requirements (MPRs) that a home must meet to be eligible for a VA loan. These requirements ensure the property is safe, structurally sound, and sanitary. If a property cannot meet these standards, the appraiser may adjust the appraisal value downward to account for necessary repairs or improvements.

It’s important to remember that a low appraisal is not necessarily a deal-breaker. Understanding the reasons behind it can help you take steps to address the issues and move forward with your home purchase.

Options After a Low VA Appraisal

Negotiating with the Seller

One of the most common ways VA home buyers get around a low appraisal is by getting the seller to lower the sales price. Some homeowners should consider a low VA appraisal as a wake-up call that their home might not be worth what they think, especially if they have overvalued their home. They could then lower the asking price to the same value as the appraisal, clearing the way for the VA loan to go through.

Requesting a Reconsideration of Value

If you believe the appraisal was too low, you can appeal the valuation of the home using the VA’s Reconsideration of Value (ROV) process. This involves providing additional evidence or information that supports a higher valuation. The appraiser may choose to change the market value considering these or may not. But, if he or she doesn’t, a written explanation is required.

Covering the Appraisal Gap in Cash

Another option is to cover the difference between the appraised value and the asking price in cash. This action is often referred to as covering the ‘appraisal gap.’ For instance, if the home is appraised at $200,000 but the asking price is $225,000, you would need to cover the $25,000 difference in cash.

Summary of Ways to Help Close Your VA Appraisal Gap: Negotiate with the seller to lower the price. Request a Reconsideration of Value. Cover the appraisal gap in cash.

These options provide flexibility for VA home buyers to proceed with their home purchase even when faced with a low appraisal.

Challenging a Low VA Appraisal

If a VA appraisal comes in low, you have the chance to appeal. Whether you are the buyer or seller, you can request a formal Reconsideration of Value (ROV). This involves your mortgage lender submitting a request to the VA to review the appraisal. The ROV process allows you to present additional facts about the property that the original appraisal may have overlooked.

To strengthen your ROV request, gather supporting evidence that can help justify a higher property value. This evidence may include:

  • Recent sales of comparable homes in the area
  • Errors on square footage
  • Omitted upgrades or renovations
  • Any other relevant property details

Once you submit the ROV request, the VA will review the additional information provided. The outcomes of a challenge include:

  1. Approval of the ROV: The VA agrees with the additional evidence and increases the appraised value.
  2. Denial of the ROV: The VA does not find the additional evidence compelling enough to change the appraisal value.
  3. Partial Adjustment: The VA makes a partial change to the appraised value based on the new evidence.

It’s important to note that while challenging a low VA appraisal can be a detailed process, it offers a valuable opportunity to potentially increase the appraised value and proceed with your home purchase.

Preventing Low VA Appraisals

Selecting a property that meets VA standards is crucial. Properties in good condition and in desirable locations are more likely to appraise well. Ensure the property complies with VA Minimum Property Requirements (MPRs) to avoid any surprises during the appraisal process.

A buyer’s agent with experience in VA loans can be invaluable. They can help you choose a home that’s likely to appraise well. Developing a good relationship with your lender’s loan officer can ensure someone influential is on your side.

Stay informed about the local real estate market. Understanding market trends can help you make informed decisions about which properties are likely to appraise well. Knowledge of recent sales and property values in the area can provide a realistic expectation of the appraisal value.

Being proactive and informed can significantly reduce the risk of a low VA appraisal, ensuring a smoother home buying process.

Impact of Low Appraisals on VA Loan Eligibility

Effect on Loan Approval

A low VA appraisal can significantly affect the loan approval process. If the appraised value is lower than the agreed-upon purchase price, the VA loan may not be approved for the full amount. This discrepancy can lead to delays or even cancellations of the loan application. Borrowers may need to renegotiate the purchase price or cover the difference out of pocket to proceed with the loan.

Alternative Property Options

When faced with a low appraisal, buyers have several alternative options:

  1. Renegotiate the Purchase Price: Buyers can negotiate with the seller to lower the price to match the appraised value.
  2. Seek a Different Property: Sometimes, the best option is to look for another property that meets the VA’s appraisal standards.
  3. Request a Reconsideration of Value: Buyers can appeal the appraisal by providing additional evidence to support a higher value.

Long-Term Implications for Buyers

Low appraisals can have long-term implications for buyers. They may need to invest more cash upfront, which can strain their finances. A pattern of low appraisals in a particular area can indicate a declining market, affecting future property values and resale potential. Buyers should weigh these factors when deciding how to proceed after a low appraisal.

It’s essential to work with experienced real estate professionals who understand the VA loan process and can guide you through the challenges of a low appraisal. Their expertise can make a significant difference in navigating these complexities.

Low appraisals can significantly affect your VA loan eligibility, making it harder to secure the home of your dreams. Don’t let this obstacle stand in your way. Visit our website to learn more about how you can navigate these challenges and ensure your eligibility. Our team is here to guide you every step of the way.


Navigating a VA loan with a low appraisal can be challenging, but understanding your options and rights can make the process smoother. Whether you’re discussing with the seller, asking for a reassessment of value, or looking at other properties, being well-informed and taking initiative is crucial. Remember, the VA loan program supports veterans and active-duty service members in achieving homeownership, and there are resources available to assist you every step of the way. By leveraging the benefits of the VA loan and seeking guidance from experienced professionals, you can overcome appraisal hurdles and secure the home that meets your needs and budget.

Frequently Asked Questions

What causes a low VA appraisal?

The property’s market value can cause a low VA appraisal being lower than the asking price, issues with the property’s condition, or non-compliance with VA’s Minimum Property Requirements.

Can I challenge a low VA appraisal decision?

Yes, you can challenge a low VA appraisal decision by submitting a Reconsideration of Value (ROV) request through your mortgage lender to the VA.

How often do VA appraisals come in low?

According to Fannie Mae, appraisals, including VA appraisals, come in low about 8% of the time. This can happen with any type of loan, not just VA loans.

What are my options if I receive a low VA appraisal?

If you receive a low VA appraisal, you can negotiate with the seller to lower the sales price, request a reconsideration of value, or cover the appraisal gap in cash.

Does a low VA appraisal affect my eligibility for a VA loan?

No, a low VA appraisal does not affect your eligibility for a VA loan. However, it may affect your ability to purchase the particular property you are interested in.

How can I avoid a low VA appraisal?

While there’s no sure-fire way to avoid a low VA appraisal, working with an experienced buyer’s agent and developing a good relationship with your lender’s loan officer can help you choose a home likely to appraise well.