The Tidewater process is an extra step that sometimes occurs with VA home appraisals. It is used in cases where the property appraises below the contract purchase price. Tidewater gives the VA-approved appraiser a way to request additional information that might support the sale price.
The VA Home Appraisal Process
The Department of Veterans Affairs (VA) loan program is a popular financing option among military members and veterans in Washington and Oregon, the primary states we serve.
This program has specific requirements for both the borrower and the property being purchased. Among other things, a full home appraisal must be completed to determine the current market value of the property (as with most mortgage programs).
In some scenarios, the VA-approved home appraiser might use something known as the Tidewater initiative. This option allows the appraiser to request additional information that supports the sale price of the home. The Tidewater Initiative is used in cases where the home is appraised for less than the purchase/sale price.
Read more: VA home appraisal overview
The Tidewater Initiative Used by Appraisers
Also referred to as the Tidewater policy or process, the Tidewater Initiative was created in 2003. The Department of Veterans Affairs implemented this policy to allow home appraisers to request additional sales information prior to the appraisal being completed.
There’s a misconception that the Tidewater policy, when invoked, could derail the VA loan process and stop the home sale in its tracks. But that’s actually the opposite of what it was designed to do.
When used correctly, this policy can actually help keep the transaction move forward. That makes it relevant to buyers, sellers, lenders and real estate agents who are involved with a VA-loan home sale in Washington or Oregon.
According to a VA clarification document distributed last year:
“Through the years, this process has assisted Veterans in attaining the home they desire. While housing data sources have improved, there are still times when relevant sales are not readily available via traditional data sources. Using the Tidewater process gives interested parties the opportunity to provide additional sales data that may support the contract price.”
In this context, the phrase “interested parties” could refer to the home seller, the listing agent, and even the lender. The Tidewater process allows these individuals to provide additional information (like comparable sales data) that might help to justify the sale price. The overriding goal is to keep the process on track, and to facilitate the sale of the home.
Basic Steps in the Process
The Tidewater initiative/process is typically only used in cases where the appraisal comes in below the purchase price that the buyer and seller have agreed on. If the VA home appraiser believes that the property value might end up being short of the purchase price, he or she could invoke the Tidewater initiative. So it’s essentially a request for supporting information.
The process usually goes something like this:
- The buyer (who is using a VA loan) and the seller agree upon a purchase price.
- The buyer / borrower goes back to the lender with a signed purchase agreement.
- The lender will order a home appraisal, to be completed by a licensed appraiser who is approved by the Department of Veterans Affairs.
- The appraiser uses real estate sales records and other data to determine the value of the subject property being purchased.
- If the appraiser determines that the value is going to come in below the contracted purchase price, he can utilize the Tidewater policy.
- He or she will send details of the request to the designated point of contact (POC), which is usually the lender.
- The POC typically notifies the real estate agents involved in the transaction that a Tidewater Initiative notice has been received.
- The interested parties then have two working days to provide any additional information to the appraiser.
- The appraiser will review the information that was provided, and possibly adjust the appraised value of the home if he/she the evidence supports that.
- The completed appraisal gets submitted to the VA.
- Whether or not the loan can close will depend on the ultimate findings and determination made by the appraiser, in relation to the sale price.
Read More: 5 Common Questions About Using a VA Loan
Note: This a basic overview of the steps involved in the Tidewater process for VA home appraisals in Washington and Oregon. There might be additional or fewer steps, depending on the situation.