When it comes to appraising homes for buyers using VA-backed financing, the Tidewater process plays a crucial role in determining fair market value. This procedure, implemented by the Department of Veterans Affairs (VA), aims to protect the interests of veterans.
What is the Tidewater process and what is its significance in VA-backed home appraisals?
The Tidewater process, also known as the Tidewater Initiative, is a specific procedure used by the Department of Veterans Affairs (VA) when appraising a home for a buyer using VA-backed financing. Its purpose is to protect the interests of veterans and ensure fair market value. The Tidewater process primarily applies when the appraised value of the home is believed to be lower than the agreed-upon purchase price.. Here's how it works:
A VA-approved appraiser, impartial and unaffiliated with the transaction, is randomly chosen to conduct the appraisal. The appraiser works to value the property, considering its size, condition, location, and comparable sales in the area. If the appraiser determines that the appraised value appears that the estimated market value might be lower than the purchase price (this can happen at any point in the process), they promptly inform the lender, which initiates the Tidewater process.
At this point, the lender has the opportunity to provide the appraiser with any relevant information that might influence the property's valuation, such as recent comparable sales or a list of property improvements. This information can be provided by any party to the transaction whether the buyer, seller, agents or the lender themselves. The appraiser reviews any additional information and when appropriate, uses this information within the appraisal. Even if this information has already been considered and it did not make any substantial changes to the value, the VA requires the appraiser to make comments within the report reflecting this.
From the buyer’s perspective, if the appraised value remains below the purchase price, the lender informs the buyer. The buyer can then decide whether to renegotiate the price, bring additional funds to closing, or terminate the contract.
The Tidewater process is a vital step in VA-backed home appraisals, ensuring fairness and protecting the interests of veterans. By incorporating additional information and allowing for adjustments, this process strives to establish an accurate appraised value. It also allows those who are parties to the transaction to provide valuable information that most often assisted them in making their purchase decision. Ultimately, it empowers buyers and sellers to make informed decisions based on the appraisal outcome.
For more information take a look at the VA link on their page by clicking on the following link: