If you are selling your home, you want to ensure that a potential buyer can secure a VA Loan for the property. And the VA has two primary concerns when it comes to deciding whether or not it will approve a loan: (1) Is the home structurally sound, safe, and free of hazards? and (2) Does the home appraise at fair market value? If a house is deemed unsafe, the VA will not approve the loan. If the property is appraised below market value, a buyer will need to be able to make up the difference between the appraised value and the contract price, if intent on moving forward with the purchase.
Home updates can address both obstacles for a buyer intending to use their VA Loan benefit. It is to your advantage as a seller to proactively remedy any potential difficulties in advance of the sale of your home rather than attempt to rectify deficiencies outlined in a poor VA appraisal report. The former option saves you time and can increase your bottom line. The latter can sabotage a sale entirely.
But before you decide to remodel the kitchen or rip apart that bathroom, make sure that you are working with a real estate agent who is experienced with VA Loans. It is a mistake to assume that only the buyer needs the insight that a VA-savvy real estate agent can provide. You too can benefit from an individual who is able to advise you of potential VA appraisal issues and help you remedy them before they become a deterrent to the sale of your property.
Safety (and structure) first. While kitchen and bathroom remodels are good for an asking price, and potentially for market value, your sale is doomed if you can’t get past the VA’s minimum property requirements. Here are a few of the issues that can wreak havoc on a VA Loan approval:
Pest control. Dependent upon the state, the lender, and the contract, you may be required to certify that the property is termite and pest free. Termite inspections are typically only good for 90 days for lending purposes. While this is not something you need to do immediately, if there’s not a contract looming, it is something that should be on your radar. Make sure to budget for this accordingly.
Mold, fungus, and dry rot. These conditions are required to be reported by an appraiser if found. Again, like with pest control, address these potential issues before they are a red flag in the purchase of your home.
Roof. Your roof should be free of holes or damage. Even a minor problem with your roof can cause major problems for a buyer trying to get a VA Loan. Roof problems can lead to interior damage as well as damage to your home’s foundation down the road. And from a prospective buyer’s perspective, your roof is one of the first things someone will see when they pull up to your property.
Plumbing, heating, and electrical systems. You must have running water, working electricity, and sufficient heating. Beyond that, there should be no safety issues—such as concerns about an outdated water heater that’s prone to explode or an electrical system insufficient to provide for the demands being made on it. Do your pipes need to be insulated or replaced? Can your house sustain a comfortable temperature? What’s in your home should work properly and should be consistent with the age of the home.
This includes your appliances. While you are not required to include them in the sale, if they are a part of the contract, they should be in working order. You should remove things that may not pass inspection, like a nonworking stove, for example.
Windows. A broken window or an improper seal may not seem like a deal breaker, but it can be. Not only can it impact the ability to maintain a home at a proper temperature, but it can also affect public perception. Broken windows are a sign of neglect or lack of care. They suggest that if the little things haven’t been addressed, then there may very be larger issues with a home.
Smoke alarms and carbon monoxide detectors. Inspectors often call out a home without properly placed, working smoke alarms. Check your local codes or ask your real estate agent for guidance regarding what is required where you live.
Once you’ve addressed any structural or safety issues, you can then focus on aesthetics. While the VA does not care about the age of a home or any questionable taste in color schemes, carpet choices, or wallpaper, the aesthetics do matter when it comes to getting a fair market value. Here again, your best resource is your real estate agent. He knows the local landscape. She’s on top of what potential buyers are most interested in. Let that knowledge and feedback inform any choices you make to your home with the hope of increasing its fair market value.