Property Inspection Waivers: Are they 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 waiver program, started by Fannie Mae in 2017, allows you to be approved for a mortgage without getting an appraisal. It's a relatively new concept, and some lenders love it. But what caused it, and what risks are associated? 
How do Property Inspection Waivers work?Essentially, your lender determines what your home is worth. They determine its value systematically on a computer, employing an online database from Fannie Mae in lieu of hiring a local appraiser to personally inspect the home you're getting ready to buy. So, rather than a firsthand evaluation, lenders rely solely on computer processes to sort through a trove of previously collected data. Get your appraisal from Nader Appraisal Services today Get a quote nowWho can receive a PIW?The program's currently limited, but it's including more types of transactions regularly. Your property needs to have entries in Fannie Mae's electronic database, so homes which have never been appraised aren't eligible for a PIW. Additionally, you need to have an excellent credit score and high assets to be approved. Why do lenders use it?The waiver removes appraisal expenses, and it can trim closing time substantially for buyers. On the surface, this streamlined process sounds like a bargain — but there's a key point you'll want to consider. With a PIW, your lender is NOT held responsible if the assessment turns out to be wrong. That's great for lenders, but awful for the home buyer. What could go wrong if I agree to a PIW?The information in Fannie Mae's database is pulled from past appraisal reports done by professional appraisers. it might be accurate to a degree, 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 appraisal of your home, new improvements, remodels, or damages can easily be omitted by the system. Because of these deficiencies, you can imagine an instance where your property is priced too high by the computer program evaluating it. If that happens, you could run into issues when it's time to sell. 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 typically costs a few hundred dollars, but it can save you thousands (or tens of thousands) in the long run. With a Property Inspection Waiver, there is simply no guarantee you're receiving an honest valuation of your most expensive asset. Nader Appraisal Services can help. Buying or refinancing a home is a big decision with big consequences. You should know without a doubt 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 property, nothing is more precise than the careful assessment of a licensed professional you trust. |