VA loans, and the appraisals that come with them, are proving head sores for builders.

The appraisal process is one that has received continuous coverage in media outlets, ours included, namely in how appraisals often result in lower home values than the deals brokered by agents – and which often cancels the sale.

A new piece by National Mortgage News, though, focuses on the plight of veterans of the military, and how their homebuying prospects are being increasingly blighted by the appraisal process mandated by the Veterans Administration, which finances the sale and oversees the purchase.

Citing a new survey conducted by the John Burns Real Estate Consulting, which sought opinions from 188 home building executives, the article states that builders are becoming increasingly exasperated with balancing the demanding requirements of military appraisers with their own profit-motives.

“The appraisals required to close VA loans are intended to protect veterans from overpaying, but end up preventing many from buying the homes they want,” said Jody Kahn, a vice president of John Burns, in the article, adding that because the appraisers are “so conservative, that the (loans) rarely close.”

And though all the builders surveyed expressed joy at selling to veterans, the frustrating appraisal environment is making them second-guess the decision to do business with the demographic.

“All of the builders we spoke with love selling homes to Vets, but many have grown so frustrated with the process that it is becoming financially questionable to continue,” Kahn said.

Interestingly, the surveyed builders’ chief complaints about the appraisers hired by the Veterans Administration echoed many of the same sentiments expressed in an August story we wrote on appraisals, namely: unqualified appraisers with little knowledge of the local market, which leads to low-ball estimates and a complete disregard for all the unique, distinguishing features of the assessed property. And, once the appraisal is said and done, there is no way for the builders to appeal the decision.

“The VA appraisal is final by the time the builder and lender receive it, and the process to refute the value or correct factual errors is ineffective,” Kahn said. “The builder or lender has to appeal to the Department of Veterans Affairs, which takes a minimum of 60 days and rarely results in a change in value.”

“You can’t go to a second lender if you get a low appraisal on a VA,” one builder told John Burns, according to the article.

Builders also commented on the longevity of VA appraisals. After such appraisals are made, they linger with the property for six moths, and the builders surveyed argued that such a length of time negatively impacts adjacent properties to such a degree that some have all but eliminated home sales involving VA financing.

This is not the first time that the VA process has come under scrutiny; last summer, NPR reported on the strict requirements of VA loans when applied to foreclosed properties, and how often, the same requirements “intended to protect buyers also create hurdles for them.”