Are Property Inspection Waivers worth the risk?If you're buying or refinancing a home, your lender might give you the option to use a Property Inspection Waiver (PIW) on your application. The PIW program, introduced by Fannie Mae in 2017, allows you to move forward with your mortgage without needing an appraisal at all. It's a relatively new concept, and some lenders love it. But what prompted the change, and what risks are associated? 
How do Property Inspection Waivers work?Basically, the value of your home is established by your lender. They determine its value automatically on a computer, using an online database from Fannie Mae rather than hiring a local appraiser to inspect the property you're about to buy. So, rather than a manual evaluation, lenders rely entirely on computer processes to sort through an array of previously collected information. Get your appraisal from LIBERTY APPRAISAL & CONSULTING INC. / EIPPER REALTY today Get a quote nowWho is qualified for a Property Inspection Waiver?The program is currently limited, but it is including more types of transactions regularly. Your home needs to have records in Fannie Mae's electronic database, so homes which have never been appraised aren't eligible for a Property Inspection Waiver. Additionally, you need to have an excellent credit score and high assets for approval. Why is a Property Inspection Waiver applied?The waiver eliminates appraisal charges, and it can reduce closing time substantially for buyers. Outwardly, this streamlined process sounds like a bargain — but there's a bottom line you will want to recognize. With a PIW, your lender is NOT liable if the valuation ends up wrong. That's great for lenders, but terrible for the home buyer. What could go wrong?The information in Fannie Mae's database is derived from previous appraisals completed by professional appraisers. This data might be somewhat accurate, but it won't necessarily be a current assessment of the exterior and interior quality in a building that's regularly changing. Without a professional valuation of your home, recent improvements and/or damages could certainly be left out by the system. Because of these shortcomings, it's easy to imagine a situation where your property is priced too high by the program assessing it. If that happens, you could run into problems 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 usually costs a few hundred dollars, but it can save you a lot more in the long run. With a Property Inspection Waiver, there's no guarantee you're getting an honest valuation of your most expensive asset. LIBERTY APPRAISAL & CONSULTING INC. / EIPPER REALTY can help. Buying or refinancing a home is a big decision with big consequences. You need to know with certainty that you're getting a fair deal, and working with a licensed appraiser is the safest way to go. Computers and algorithms are 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 examination of a licensed professional you trust. |