Condos and the VA Loan

 

Here are things that a VA certified appraiser will look for.

The appraiser is selected using a third party lottery system, so as to avoid nepotism.  

The appraiser does not work directly for the VA, but for a lender and has been certified, to do VA appraisals.

 

What will an appraiser (VA certified) look for at the appraisal? 

(In terms of safety and home condition.)

 

The VA condo approval process. In order to secure VA loans for a condominium, the condo needs to be on the VA-approved list. To see if the condo you are interested in is listed on the VA-approved list, go to the VA condo portal & type in the town and Homeowner Association (HOA) name. Also, check the HUD list for FHA approval; they follow a similar process and requirements, and if on one list, they will usually get onto the other list.

 

 

To approve the condo HOA & issue a VA number. Processing time can be 8-30 days. As of 2020, it seems to average less than 3 weeks per request. 2021-2023, it is about 12 business days. Documents that the Cleveland VA RLC might require for New and Existing Projects

 

1. Master Deed
   
   
2. Unit Deed
   
   
3. Declaration of Trust
   
   
4. Any amendments made to the Declaration of Trust
   
   
5. VA Condo Survey
   
   
6. Budget & Reserves
   
   
7. HOA Master Insurance
   
   
8. Last two meeting minutes
   
   
9. Pending Litigation Statement (A couple sentences, stating if there is, or is not, pending litigation)

1. Management Company contact info
   
   
2. Trustee contact info
   
   
3. Map/floor plan/ survey
   
   
4. New Projects, the developer’s attorney will have everything.

 

A home inspection for a Condo can run $400-$700+/-

 

Condos need to be move-in-ready condition.

 

Be aware that the Co-ops & Condexes Cooperative apartments (“co-ops”) differ from condominiums (“condos”) in several ways. When you buy a coop, you buy stock in the corporation that owns the apartment building. The building then “leases” the coop to the buyer under a long-term proprietary lease. The VA will not do Co-ops, as they impact the owners to sell and rent the unit, as they wish.

 

A Condex is a duplex-style condominium development consisting of only 2 units. Lower prices and no condo fees are the top benefits of a Condex. You also have your own yard with all its maintenance, too! Sounds very similar to owning your own single-family property, other than each unit shares a wall. The VA is usually fine, with Condexes.

 

Read the remarks in the MLS listing carefully, if the words, contractors, developers, investors, repairs, as-is, TLC, or there is a negotiation fee of $1000-$10,000, beware, these are tells that the property will not work with a VA loan.

 

Also, if there are no pictures, then there is likely nothing good to take a picture of! (This is why you need an agent; if it were easy, you would not need me!)

 

The condo needs to have 3-5 Years' worth of roof life left. 3-5 Years of life is, in itself, hard to determine. Asphalt shingle roofs can last 20-30 years. Rubber roofs about 20 years.

 

Clues in determine the viability and life of a roof are: look for ceiling stains & leaks, and missing shingles, damaged or missing seals around any vents and chimneys, warped sheathing, chimneys that need repointing (cement) between the bricks, or missing bricks. Moss happens to roofs that are under or near tree limbs.

 

This is not such a big deal. There are sprays that will kill the moss, and it will come off on its own. Also, make sure the bathroom fans are vent out of the attic; the accumulation of moisture can lead to mold in your attic. (see mold below)

 

The Wood Destroying Insect Inspection Report (Form NPMA-33) is required by the VA. This report is necessary for any VA loan, on any property, MF, SF, or condos. Insects like termites, powder post beetles, carpenter ants, carpenter bees, etc, can be an issue. However, so long as the damage is minor and not structural, it is remediated by treatment, by a pest company. Usually $200-$1500+/-, the VA will want invoices, and the treatment documentation (chemicals used). If the damage is structural, then a structural engineer is needed to assess the damage and advise on the proper repairs. Many sellers and buyers will not want to deal with this due to the expense. ($300+ for the engineer, and a lot more money to repair)

 

Some condos are converted multi-families, and are quite old, some over 100+ years old. Building practices a century ago were not as good as today. Often, the foundations are lacking the proper footings, beams, and supports. This leads to uneven floors & settling. Foundations in time need to be repointed; the gaps provide access for pests to enter the property. Dirt floors can allow moisture to enter the basement, and termites love wet/moist wood. Every basement should have a dehumidifier!

 

I have seen lovely Victorian properties. that have what appears to be modern circuit breaker 200amp, electrical systems. However, buried inside the walls is knob and tube wiring or aluminum wiring, both pose a hazard that could cause shorts and possible electrical fires. Other potential issues are items like the Federal Pacific electrical box, they had a fire issue, and had a lawsuit over said issues in the 1970’s.

 

Some condos can have cast-iron plumbing. This has a service life of about 100 years. It rusts from the inside out, so by the time it starts to leak, it will need replacing asap.

 

Since 1978, lead paint has been banned. It causes health issues, especially in children under six. Paint chips and dust created from opening painted wood window sills can be inhaled by children and adults. The mandatory form associated with lead paint is THE PROPERTY TRANSFER NOTICE. Many owners do not test for lead. It is expensive to delead, and once you test, you have to disclose the results. Whether this is right or wrong, many sellers prefer to remain ignorant, than have to test for the presence of lead.

 

There are thousands of types of mold. A small percentage can cause health effects. Mold tests cost about $600-$1000. Mold can grow on wood and paper in the presence of moisture. If the bathroom vents are vented into the attic, or there is a dirt floor in the basement, then the conditions for mold might exist. Inspectors are not mold experts; they will say there is ‘an unknown substance or growth,’ or something similar.

 

Some older properties may have asbestos tiles or insulation on the pipes. While a good insulator, and harmless, if not airborne. It is harmful if airborne.

 

Many Condos are in towns and cities, with municipal water & sewer. Municipal water & sewer are ok for VA. However, if they have a well, the water needs to be tested by a 3rd party (often the home inspector), for Nitrites, Nitrates, Ecoli, & Coliform. Essentially, the runoff from fertilizers and bacteria.

 

Otherwise known as a Title V inspection. New systems have what is called a Certificate of Compliance. These can be found at the town or city Board of Health (BOH). These certify the septic system is operational, safe, and in good condition. If you have a city sewer, then this is not a problem or concern.

 

There should be separate Utilities for all the condo units. Make sure they are in good condition. Look for leaks, corrosion on the pipes, and the age of the systems. Tank water heaters only have a limited life of about 10+ years.

 

If there is a basement & a basement unit, you can request the inspector to do a radon test. Radon is a radiological naturally occurring gas that comes up from rocks (granite) in the ground. If detected in higher concentrations, a radon mitigation system can fix it easily enough. It is essentially a fan that transfers air, under the foundation, to outside the house and costs about $1000-$2000+/-.

 

An appraiser will do a VA appraisal report. They will look for safety items, like broken stairs, missing handrails, & balusters, chipping paint, etc. Important! Make sure all the bedrooms have a window (that exits to the outside), a door, a closet, heat, and are more than about 7×7 feet. Otherwise, it will not count as a bedroom and will not appraise as high.

 

The home inspector will have to include them in a pest inspection. The appraiser may include any outbuildings, as well, as well as check safety items, as mentioned before.