Property Inspection Waivers: Are they worth the risk?If you're 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 program, introduced by Fannie Mae in 2017, allows you to move forward with your mortgage without an appraisal at all. It's a newer concept, and some lenders love it. But what determined the change, and what are the associated risks? 
How does a Property Inspection Waiver work?Basically, your lender establishes what your house is worth. They determine the value systematically on a computer, using an online database from Fannie Mae rather than hiring a local appraiser to inspect the home you're about to buy. So, rather than a firsthand evaluation, lenders rely on computer algorithms to sort through a trove of previously collected data. Get your appraisal from Tri-County Appraisals today Get a quote onlineWho can receive a PIW?The program's currently limited, but it's expanding regularly to include more types of transactions. Your property has to have entries in Fannie Mae's electronic database, so homes which have never been appraised are not eligible for a PIW. Additionally, you need to have an excellent credit score and high assets to be approved. Why is a Property Inspection Waiver applied?The waiver removes appraisal expenses, and it can reduce closing time considerably for buyers. At first glance, this streamlined process seems like a bargain — but there's a bottom line you will want to keep in mind. With a PIW, your lender is NOT liable if the valuation turns out to be wrong. That's great for lenders, but awful for the home buyer. Could anything go wrong?The information in Fannie Mae's database is derived from previous appraisal reports completed by professional appraisers. it might be accurate to some extent, but it won't necessarily be a current evaluation of the exterior and interior quality in a building that changes from year to year. Without a professional appraisal of your home, new improvements, remodels, or damages could certainly be missed by the system. Because of these deficiencies, it's easy to imagine an instance where your home is priced too high by the system evaluating it. If that happens, you could run into problems when it's time to put it back on the market. You may not be able to receive 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 lot more in the future. With a Property Inspection Waiver, there's simply no guarantee you're receiving an honest valuation of a premium asset. Tri-County Appraisals can help. Buying or refinancing a house is a big decision with grand consequences. You want to know with certainty 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 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. |