If you’re a veteran or service member using a VA loan to buy a home, understanding the VA appraisal process is essential. This appraisal culminates in an official document known historically as the VA Certificate of Reasonable Value (CRV), now called the Notice of Value (NOV).
The CRV/NOV represents the VA’s confirmation of a home’s fair market value and ensures the property meets their safety and quality standards. It serves to protect borrowers from overpaying and the VA from guaranteeing loans on overvalued properties.
The Transition from CRV to NOV
Although the term “Certificate of Reasonable Value” or CRV is still commonly used, the VA has updated the terminology to Notice of Value (NOV). Both names refer to the same official appraisal document that your lender obtains as part of the VA loan approval process.
How the VA Appraisal Process Works
The appraisal is ordered by your lender after your offer on a home is accepted. The VA assigns a licensed, independent appraiser who evaluates the property’s condition and compares it to recent sales of similar homes in the area to determine fair market value.
The appraiser also inspects the home to see if it meets the VA’s Minimum Property Requirements (MPRs), which cover safety, sanitation, and structural soundness standards.
Once the appraisal is complete, the VA reviews the report and issues the NOV to the lender, defining the maximum loan amount the VA will guarantee.
What If the Appraisal Is Lower Than the Sale Price?
If the VA appraisal indicates a value below the agreed-upon purchase price, the VA will not support a loan exceeding the appraised value. However, buyers have several options:
- Negotiate a lower price with the seller to match the appraised value.
- Cover the difference in cash if the seller is unwilling to reduce the price.
- Request a Reconsideration of Value (ROV) by providing evidence of higher comparable sales.
- Cancel the contract under the VA Escape Clause, reclaiming your earnest money deposit.
Minimum Property Requirements (MPRs)
The VA appraisal also ensures the property meets the MPRs, which include essential safety and livability standards such as:
- A structurally sound roof
- Safe electrical wiring
- Absence of hazardous materials like lead-based paint
- Proper heating, plumbing, and sanitation
- Safe access to the property
Any deficiencies must be resolved prior to loan closing, typically requiring the seller to complete necessary repairs.
Frequently Asked Questions
Is a VA appraisal the same as a home inspection?
No. The VA appraisal focuses on value and basic safety for loan approval. A home inspection is a detailed evaluation for the buyer’s awareness of the property’s condition and potential issues.
How long is a NOV valid?
A Notice of Value usually remains valid for six months for existing homes and up to twelve months for new construction, per VA guidelines.
Can I get a copy of the NOV?
Yes. Your lender must provide you with a copy of the appraisal report upon completion.
For more details on VA loans and appraisals, visit the Department of Veterans Affairs official site.