Tidewater Notices on VA Loans

April 12th, 2022

water and beach

If you have never even heard of a Tidewater Notice, you are probably wondering what is a tidewater?! I know the first time I heard the term I was confused. My first thought was, “the property isn’t waterfront, what are they talking about tidewater for?

The Tidewater process by the Department of Veterans Affairs (VA) gives borrowers a way to try to combat a low appraisal valuation before it is even official. Before finalizing the appraisal report, VA appraisers can notify the lender that it looks like the home’s value will come in below the purchase price. This is known as invoking the Tidewater Initiative, or Tidewater for short.

On VA loans the Tidewater process allows appraisers to request additional sales information prior to the appraisal being completed. I think this is a smart way to handle this situation, as it gets everybody involved an attempt to increase the appraisal value prior to completion of the appraisal. This process has been in existence since 2003.

There are times when comparable sales that should have been used in the appraisal are not readily available, and it’s nice for the VA appraiser to have a process to seek out help in finding additional information. Or there might be times when the appraiser was unaware of improvements that the owner has made since buying the property. Of course, there’s no guarantee that the appraiser will agree with the data that is sent to them to increase the appraisal value. At least the Tidewater process gives all interested parties the opportunity to provide additional sales data that may support the contract price.

The appraiser can’t discuss details of the appraisal except to explain that the recent comparable home sales that they found and are being used don’t support the sale price. At that point, the lender has two days to provide the appraiser with additional comparable home sales that support the purchase price.

Lenders will typically turn to the buyer’s real estate agent and the listing agent for help in finding better recent comparable sales if they exist.

The appraiser will take those additional comparables and issue the final VA appraisal report. If the Tidewater process doesn’t lead to a sufficient increase in value, the appraiser is required to provide a written explanation as to why.

On all appraisals there’s always the potential that the appraiser doesn’t agree on the contract price, and they come up with a lower appraisal than the contract price. This can happen on any type of loan, Conventional, FHA or VA. On Conventional and FHA loans the appraiser will complete the appraisal report at the lower appraisal value without any advance notice to the lender. When the appraisal is received on a Conventional or FHA loan and the value is lower than the contract price then all parties like the realtors, lender and buyers can review the appraisal and see if they have any other data that the appraiser didn’t use to do an appraisal challenge.

An appraisal challenge is where you submit three comparable sales that the appraiser didn’t use to show the appraiser that they missed some data, in an attempt to increase the appraisal value. You can read more about appraisal challenges here.

And you can read more about the VA Tidewater process directly from the VA by clicking here.

I’ve dealt with a few VA Tidewater notices in my day. You can click here for a link to a Yelp review from a client who I helped with their VA Tidewater notice. The results were quite good. J In case the link doesn’t work the text to the review is below.

Bottom line up front: Brian is a magical unicorn lender and you would be remiss not to work with him on your next loan!
From the first time I called Brian, I knew I wanted to work with him. He took the time to get to know our situation and educate us on the loan process. Brian makes you feel like you are the only client he has. I was so impressed with him from the get go that I broke my golden rule to always shop around because in this market, I knew the quality of the lender was critical. And Brian is a highly responsive, creative, and professional lender. We called him on weekends, evenings, mornings, it didn’t matter- he was always there for us. It was a total of 6 months from that first call until we closed on our home, and there were a few times he talked me off the ledge. We are in a strong seller’s market and he did everything he could to set us apart with each offer we made. Once we went under contract, Brian’s exceptional skills and experience really shined! He made sure we never missed a step during our very tight contract timeline. It was the easiest loan processing I’ve ever dealt with. And the cherry on the top was his magical ability to respond to the VA appraiser to help our house come in ABOVE contract value (which was way higher than asking). The VA appraiser called “Tidewater” before stepping into the property and Brian spent HOURS partnering with our realtor and crafting a brilliant response to the appraiser justifying our home’s value. Well, it worked! Brian saved us from having to front tens of thousands of dollars in cash for an appraisal gap. We had been burned on the sale of our home by a VA appraiser and after going through a Tidewater situation twice, I thank my lucky stars we hired Brian. The difference between him and that big box lender our buyers had in a Tidewater scenario was beyond compare. I hope we do not have to buy another home for a very long time, but if rates somehow drop any lower, we will definitely be calling Brian. He was a shining star in our home buying process. He truly is exceptional. Look no further, he’s your guy!

Please schedule a call or email me with all of your VA mortgage questions.

Brian Martucci is a loan officer for Capital Bank Home Loans, a division of Capital Bank, N.A. He has been in the mortgage industry since 1986 and has served in a number of roles, including loan processor, loan officer, mortgage broker, branch manager, and vice president. Brian Martucci – NMLS# 185421. His opinions do not necessarily reflect the opinions and beliefs of Capital Bank Home Loans or Capital Bank. Capital Bank, N.A.- NMLS# 401599. Click here for the Capital Bank, N.A. “Privacy Policy”.

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