Let’s take an example, one that shows an advantage and disadvantage of a VA appraisal in the same attempted transaction. VA appraisals and the corresponding value of the home can come in lower than the negotiated purchase price. For example, let’s say that a buyer and seller agree on a selling price of $400,000 for the house. Then the VA appraiser does the inspection, looks at comparable sales of the property, finds issues, and then finally puts a value of $385,000 on it. Thankfully for the VA buyer, part of the required VA documentation in the transaction is the VA amendatory clause or “escape clause.” This protects the VA buyer because the seller cannot force the buyer to purchase the property at the contract purchase price of $400,000. In this circumstance, this buyer will have an option to pay cash for the difference in the contract price of $400,000 and the appraised value of $385,000. The buyer and seller may also entirely renegotiate the price, or the buyer may choose to “escape” the transaction and cancel altogether without any recourse from the seller. That protective measure is certainly an advantage for the VA buyer so the buyer is not paying more than the property is actually worth (in the opinion of the VA appraiser.)
One perceived disadvantage could be that the VA appraiser is being too conservative (even “picky”). For example, one of my clients had a recent experience with a picky appraiser. An entry walkway had a slight rise on a portion of it, and the concrete had some cracks in it. The appraiser called it a safety hazard, whereas most people’s more moderate opinion would be that it was just a small, correctable problem. The appraiser was just doing his job, but the walkway had to be repaired prior to closing. It’s a typical example demonstrating that the VA appraisal can pose both advantages and disadvantages, depending on your view.