Are Property Inspection Waivers worth the risk?If you are buying or refinancing a home, your lender might give you the option to use a Property Inspection Waiver – or PIW – on your application. The waiver program, introduced by Fannie Mae in 2017, allows you to be approved for a mortgage without an appraisal. It's a relatively new concept, and some lenders love it. But what prompted the change, and what are the risks for you? 
How does a Property Inspection Waiver work?Essentially, your lender decides what your property is worth. They determine its value automatically on a computer, using an online database from Fannie Mae rather than hiring a local appraiser to personally inspect the home you're about to buy. So, rather than a hands-on evaluation, lenders rely solely on computer processes to sift through a trove of previously collected information. Get your appraisal from Advanced Appraisals, LLC today Get a quote todayWho is qualified for a PIW?The program's limited right now, but it's including more transaction types regularly. Your property has to have records in Fannie Mae's electronic database, so homes which have never been appraised are not eligible for a PIW. What's more, you're required to have an excellent credit score and high assets for approval. Why is a PIW applied?The waiver omits appraisal fees, and it can considerably reduce closing time for buyers. On the surface, this process sounds like a bargain — but there's an essential point you'll want to recognize. With a PIW, your lender is NOT held liable if the assessment winds up being wrong. That's an added benefit for lenders, but affords zero protection to the buyer whatsoever. What could go wrong?The information in Fannie Mae's database is derived from previous appraisals done by professional appraisers. This data might be accurate to some extent, but it won't necessarily be an up-to-date assessment of the quality of a building that's constantly changing. Without a professional valuation of your home, new improvements, renovations, or damages could absolutely be overlooked by the system. Due to these deficiencies, it's easy to imagine an instance where your property 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 getting less than you paid, and you'll have no recourse against your lender when the money starts adding up. What's the bottom line?An accurate appraisal typically costs a few hundred dollars, but it can save you thousands in the future. With a Property Inspection Waiver, there's no guarantee that you're receiving an honest valuation of a premium asset. Advanced Appraisals, LLC can help. Buying or refinancing a home is a big decision with grand consequences. You should know without a doubt that you're receiving a fair deal, and working with a licensed appraiser is the smartest action you can take. Computers and algorithms are in nearly every area of modern life, but when it comes to measuring the value of your property, nothing is more accurate than the careful assessment of a licensed professional you trust. |