Property Inspection Waivers: Are they really worth the risk?If you are getting a loan for a home, your lender may give you the option to use a Property Inspection Waiver (PIW) on your application. The PIW program, started by Fannie Mae in 2017, allows you to move forward with your mortgage without an appraisal. It's a relatively new concept, and some lenders love it. But what determined it, and what are the associated risks? 
How do Property Inspection Waivers work?Basically, what your home is worth is determined by your lender. They determine its value systematically on a computer, using a database from Fannie Mae in lieu of hiring a local appraiser to inspect the home you're about to buy. So, rather than a hands-on evaluation, lenders rely entirely on computer processes to sift through a pile of previously collected information. Get your appraisal from Appraisals Unlimited, LLC ~ "Making Real Estate Real Easy, Since 1992!" today Get a quote nowWho can get a Property Inspection Waiver?The program's limited right now, but it is including more transaction types regularly. Your property needs to have entries in Fannie Mae's electronic database, so homes that have never been appraised are not eligible for a Property Inspection Waiver. Additionally, you're required to have an excellent credit score and high assets for approval. Why is a Property Inspection Waiver applied?The waiver cancels out appraisal expenses, and it can reduce closing time substantially for buyers. Outwardly, this streamlined process seems like a good deal — but there's an essential point you'll want to keep in mind. With a PIW, your lender is NOT held responsible if the valuation turns out to be wrong. That's great for lenders, but a disadvantage to the home buyer. What could happen if I agree to a PIW?The information in Fannie Mae's database is pulled from previous appraisal reports completed by professional appraisers. it might be accurate to some extent, but it won't necessarily be an up-to-date evaluation of the quality of a building that changes from year to year. Without a professional appraisal of your home, new improvements, remodels, or damages could easily be overlooked by the system. Due to these shortcomings, it's easy to imagine a scenario where your property is valued too high by the program evaluating it. If that happens, you could run into issues when it's time to put it back on the market. You could end up getting less than you paid, and you'll have no recourse against your lender when the money falls short. What's the bottom line?An accurate appraisal usually costs a few hundred dollars, but it could save you a lot more in the future. With a Property Inspection Waiver, there is simply no guarantee that you're getting an honest valuation of a premium asset. Appraisals Unlimited, LLC ~ "Making Real Estate Real Easy, Since 1992!" can help. Buying or refinancing a home is a big decision with big consequences. You should know with certainty that you're getting a fair deal, and working with a licensed appraiser is the smartest move you can make. Computers and algorithms are in nearly every area of modern life, but when it comes to measuring the value of your home, nothing is more precise than the careful examination of a licensed professional you trust. |