Property Inspection Waivers: Worth the risk?If you are getting a loan for a home, your lender might give you the option to use a Property Inspection Waiver – or PIW – on your application. The program, introduced by Fannie Mae in 2017, allows you to be approved for a mortgage without needing an appraisal at all. It's a relatively new concept, and some lenders love it. But what determined it, and what are the risks for you as a home buyer? 
How do PIWs work?Basically, your lender establishes what your property is worth. They determine the value systematically on a computer, employing a database from Fannie Mae instead of hiring a local appraiser to inspect the property you're about to buy. So, rather than a hands-on evaluation, lenders rely solely on computer algorithms to sort through a pile of previously collected information. Get your appraisal from Residential Appraisal Service, LLC today Get a quote todayWho can receive a Property Inspection Waiver?The program is limited right now, but it is including more transaction types continuously. Your home has to have records in Fannie Mae's electronic database, so homes which have never been appraised are not eligible for a Property Inspection Waiver. Additionally, you need to have an excellent credit score and high assets to be approved. Why do lenders use PIWs?The waiver eliminates appraisal fees, and it can reduce closing time substantially for buyers. At first glance, this simplified process sounds like a bargain — but there's a bottom line you'll want to recognize. With a PIW, your lender is NOT liable if the assessment winds up being wrong. That's a bonus for lenders, but awful for the home buyer. Could anything go wrong?The information in Fannie Mae's database is derived from past appraisal reports completed by professional appraisers. This data might be somewhat accurate, but by definition, it won't be an up-to-date assessment of the exterior and interior quality in a building that's regularly changing. Without a professional valuation of your home, recent improvements, remodels, or damages could absolutely be missed by the system. Because of these deficiencies, it's easy to imagine a situation where your home is priced too high by the computer program assessing it. If that happens, you could run into issues when it's time to put it back on the market. You could wind up settling for far less than you paid, and you'll have no recourse against your lender when the money falls short. What's the bottom line?A definitive appraisal typically costs a few hundred dollars, but it can save you a substantial amount more in the future. With a PIW, there's no guarantee you're getting an honest valuation of a premium asset. Residential Appraisal Service, LLC can help. Buying or refinancing a property is a big decision with big consequences. You need to know without a doubt that you're getting a fair deal, and working with a licensed appraiser is the smartest way to go. Computers and algorithms have assumed a place in almost every area of modern life, but when it comes to measuring the value of your home, nothing is more accurate than the careful assessment of a licensed professional you trust. |