For many homebuyers, a low appraisal is a deal-killer. However, the VA loan program includes a unique safeguard called the VA Tidewater Initiative. This process provides a proactive window for veterans and their agents to defend a home’s value before the appraisal is finalized.
What is the VA Tidewater Initiative?
The Tidewater Initiative is a mandatory VA procedure triggered when a VA-assigned appraiser suspects that a property’s value will come in lower than the agreed-upon contract price. Instead of simply filing a low report, the appraiser must “invoke Tidewater,” alerting the lender and agents to provide additional market data.
This transparency is a major reason why Kansas City VA home loans are often more secure for buyers than conventional financing in a fast-moving market.
How the Tidewater Process Works
Once Tidewater is invoked, a strict timeline begins to protect the closing schedule:
- The Alert: The appraiser notifies the lender’s Point of Contact (POC) that the value may fall short.
- The 2-Day Window: Real estate agents have exactly two business days to submit additional closed sales (comps) that support the purchase price.
- Review: The appraiser reviews the submitted data. If the evidence is valid, the appraiser may adjust the value upward before finalizing the report.
- Final Notice of Value (NOV): If the value still falls short, the report is finalized. The buyer can then choose to negotiate or request a formal Reconsideration of Value (ROV).
Tidewater vs. Reconsideration of Value (ROV)
Understanding the distinction between these two stages is critical for a successful closing.
How to Successfully “Beat” Tidewater
To win a Tidewater dispute, the data provided must be objective. The VA appraiser is looking for:
- Closed Comparables: Sales that closed within the last 6 months (ideally 90 days).
- Proximity: Homes within a 1-mile radius of the subject property.
- Similarity: Homes with similar square footage, bedroom counts, and lot sizes.
- Verified Upgrades: Proof of recent renovations that may not be visible in public records.
What if the Value Still Comes in Low?
If Tidewater does not result in a higher value, the veteran is protected by the VA Escape Clause. You have four main options:
- Renegotiate: Ask the seller to lower the price to the appraised value.
- Pay the Difference: The buyer can choose to pay the “appraisal gap” in cash.
- Split the Difference: A combination of a price drop and a small cash payment.
- Cancel the Contract: Walk away with your earnest money fully protected.