What is the difference between a VA appraisal and a home inspection in Colorado Springs?

A VA appraisal does two things for the loan: it confirms the home is worth what you're paying, and it checks VA's minimum property requirements, which make sure the home is safe, structurally sound, and sanitary to live in as your primary residence. A home inspection works for you: your inspector looks at the home's overall condition and points out what's wrong or wearing out, which goes well beyond those minimums. They overlap, but neither replaces the other. I recommend getting both.

What the VA appraisal does

The VA appraisal answers two questions for VA and your lender.

1. Is the home worth what you're offering? The appraiser compares the home with recent sales nearby and sets a value. That value decides how much the loan can be.

2. Does the home meet VA's minimum property requirements? VA's own handbook says these requirements help ensure the property is safe, structurally sound, and sanitary. The home must also be your primary residence. If those things are met, the appraisal isn't a big deal. If something falls short, such as a roof that lets moisture in or peeling paint on an older home, the appraisal can come back "subject to" a repair before the loan can close.

A few things worth knowing:

• VA assigns the appraiser, not your lender or your agent, from its own panel of appraisers.
• The appraiser doesn't test the home's systems. VA says plainly that an appraisal is not a home inspection, and its notice of value tells veterans they may wish to get one.
• In El Paso County, VA requires a wood-destroying insect (termite) inspection report on VA purchases, even when nothing is visible.

What the home inspection does

Your inspector works for you. They look at the home's overall condition: roof, foundation, drainage, electrical, plumbing, heating and cooling, water heater, appliances, and more. They run the systems, note what's wearing out, and recommend a specialist when something needs a closer look.

An inspection may cover some of the same things as the minimum property requirements, but it goes much further. What to look for during a Colorado Springs home inspection walks through the local issues, such as hail on roofs, sewer lines, and radon.

An example: heating versus air conditioning

Heat is a minimum property requirement. VA requires permanently installed heat that keeps areas with plumbing at 50 degrees or warmer.

Air conditioning isn't required at all. A home with no AC can still meet VA's minimum property requirements. If the home does have AC, VA expects it to work, but the appraiser isn't testing it the way an inspector does. Your inspector actually runs it, and if it isn't cooling well or something looks wrong, they'll call it out and recommend having an HVAC specialist look at it.

That's the difference in a nutshell: the appraisal asks whether the home is livable and worth the price, and the inspection tells you what condition everything is in.

Side by side

How the two fit into a Colorado Springs purchase

Colorado's standard purchase contract gives each its own deadline. The inspection comes first: by your inspection deadline, you can object to what the inspector found or end the contract (§ 10.3). The appraisal has its own deadline (§ 6). The contingencies to consider when buying in Colorado Springs explains how those protections work.

VA purchase contracts also include a clause that lets you walk away with your earnest money if the home appraises for less than the price. What happens if a home doesn't appraise for the contract price covers the options. How a home appraisal works in Colorado Springs explains the appraisal process for every loan type.

Common misconceptions

• "The VA appraisal is an inspection, so I don't need one." It isn't. The appraiser doesn't test systems or crawl the attic the way an inspector does.
• "If it passes the VA appraisal, the house is in good shape." Passing means it met the minimums. A home can meet them and still have an aging roof, a failing water heater, or a sewer line that needs work.
• "A home without air conditioning can't get a VA loan." It can. Heat is required; AC isn't.

How to decide what to do with what you learn

• If the inspection finds something serious, decide by your inspection deadline whether to ask for repairs, a price change, or to end the contract.
• If the appraisal comes back subject to repairs, work out with the seller who will make them and how before closing. The VA buyers page covers the minimum property requirements that come up most often.
• If the appraisal comes in low, look at your options before the appraisal deadline.
• If both come back clean, keep the inspection report; it's a useful record of the home's condition for years.

What could change the answer

• The home's age and condition, especially for older homes where paint, roofs, and systems are more likely to fall short of the minimums.
• A home with a well or septic system, which VA's minimums also cover.
• New construction, which has its own VA inspection and documentation rules.
• Changes to VA's minimum property requirements, which VA updates from time to time.

When to talk with a professional

Talk with your VA-experienced lender about the appraisal, any "subject to" conditions, and your timeline. Hire an independent home inspector you trust, plus a specialist such as an HVAC technician, roofer, or sewer-scope company when the inspector recommends one. And work with a local real estate professional who knows what VA appraisers look for and can help you plan for it before you make an offer.

Sources

• U.S. Department of Veterans Affairs, VA Pamphlet 26-7, Chapter 12, Minimum Property Requirements (purpose; heating; air conditioning; wood-destroying insects; appraisal is not a home inspection): https://www.knowva.ebenefits.va.gov/system/templates/selfservice/va_ssnew/help/customer/locale/en-US/portal/554400000001018/content/554400000314692/VA-Pamphlet-VAP26-7-Chapter-12-Minimum-Property-Requirement-Overview
• U.S. Department of Veterans Affairs, Local Requirements (Colorado counties requiring wood-destroying insect inspections, including El Paso): https://www.benefits.va.gov/HOMELOANS/appraiser_cv_local_req.asp
• U.S. Department of Housing and Urban Development, "For Your Protection: Get a Home Inspection" (HUD-92564-CN): https://www.hud.gov/sites/dfiles/OCHCO/documents/92564-CN.pdf
• Colorado Division of Real Estate, Contract to Buy and Sell Real Estate (Residential), CBS1 (§ 6 appraisal, § 10.3 inspection): https://dre.colorado.gov/real-estate-broker-contracts-and-forms