Are Property Inspection Waivers 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 – or PIW – on your loan application. The waiver program, initiated by Fannie Mae in 2017, allows you to be approved for a mortgage without needing an appraisal at all. It's a newer concept, and some lenders love it. But what drove the change, and what are the risks for you? 
How do Property Inspection Waivers work?Basically, deciding how much your property is worth falls into the hands of your lender. They determine its value automatically on a computer, using an online database from Fannie Mae instead of hiring a local appraiser to personally inspect the property you're getting ready to buy. So, rather than a firsthand evaluation, lenders rely solely on computer methods to sort through a bank of previously collected information. Get your appraisal from Tri-County Appraisals today Get a quote nowWho can get a Property Inspection Waiver?The program is currently limited, but it is including more transaction types continuously. Your property has to have entries in Fannie Mae's electronic database, so homes which have never been appraised aren't eligible for a Property Inspection Waiver. Additionally, you must have an excellent credit score and high assets to be approved. Why is it applied?The waiver removes appraisal expenses, and it can substantially shorten closing time for buyers. On the surface, this streamlined process seems like a good deal — but there's a bottom line you'll want to keep in mind. With a PIW, your lender is NOT held liable if the valuation turns out to be wrong. That's an added bonus for lenders, but terrible for the buyer. What could go wrong if I accept a PIW?The information in Fannie Mae's database is pulled from past appraisal reports completed by professional appraisers. it might be relatively accurate, but by definition, it will not be an up-to-date evaluation of the quality of a building that's constantly changing. Without a professional appraisal of your home, new improvements, remodels, or damages can absolutely be neglected by the system. Due to these shortcomings, you can imagine a situation where your home is priced 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 may not be able to get what you paid for it, and you'll have no recourse against your lender when the money falls short. What's the bottom line?An accurate, professional appraisal usually costs a few hundred dollars, but it can save you a substantial amount more in the long run. With a PIW, there is absolutely no guarantee that you're receiving an honest valuation of a premium asset. Tri-County Appraisals 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 action you can take. Computers and algorithms have assumed a place 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 examination of a licensed professional you trust. |