What is Tidewater?
- Generally, it is a term used for VA loans
If a VA appraiser thinks the value is going to come in lower than the purchase price they issue what is called tidewater. The lender is then notified by the appraiser that the transaction is in tidewater. The lender notifies the buyer and buyer’s agent explaining comps must be summit to the appraiser generally within 48 hours. The buyer’s agent must check the appraisal report for accuracy and then begin pulling comps. Finally, the VA appraisal will reconsider the value approved or denied.
If it’s denied buyer can renegotiate the asking price or bridge the gap between the VA loan and the contract price with cash or a different loan. If all else fails, you can walk away from the deal, and the VA Amendment to the contract will allow you to claim any earnest money deposit you made.
How can you prevent Tidewater?
- Prompt Response: Upon receiving a Tidewater notification, act quickly. The lender notifies the buyer and their agent, who then have about 48 hours to provide additional comparable sales data to the VA appraiser.
- Review Appraisal Report: The buyer’s agent should carefully review the VA appraisal report for accuracy and potential discrepancies.
- Comp Selection: Begin pulling comparable sales data that supports the purchase price. Ensure these comparable are recent, similar in features, and located in the same neighborhood or vicinity as the subject property.
- Reconsideration of Value: Submit the selected comparable to the VA appraiser for reconsideration of the property’s value. The appraiser will review the provided information and decide whether to approve or deny the initial valuation.
- Negotiation or Alternatives: If the appraised value is still lower than the purchase price and the appraisal is denied. The buyer may need to renegotiate with the seller, bridge the financial gap with cash or a different loan, or ultimately walk away from the deal. Ensure any renegotiations or changes are properly documented through amendments to the contract.
- Earnest Money Protection: If the deal falls through due to the appraisal, the VA Amendment to the contract typically allows the buyer to claim back any earnest money deposit made.
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