Are Property Inspection Waivers worth the risk?If you are buying or refinancing a home, your lender may give you the option to use a Property Inspection Waiver (PIW) on your application. The waiver program, introduced by Fannie Mae in 2017, allows you to move forward with your mortgage without getting an appraisal at all. It's a newer concept, and some lenders love it. But what prompted the change, and what risks are there for you? 
How do PIWs work?Basically, your lender determines what your house is worth. They determine the value automatically on a computer, using a database from Fannie Mae in lieu of hiring a local appraiser to personally inspect the home you're about to buy. So, rather than a manual evaluation, lenders rely on computer methods to sort through a trove of previously collected data. Get your appraisal from Schuyler Valuation Services today Get a quote todayWho is eligible for a Property Inspection Waiver?The program is currently limited, but it's progressively expanding to include more transaction types. 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. Additionally, you're required to have an excellent credit score and high assets to be approved. Why is a PIW used?The waiver removes appraisal expenses, and it can cut closing time considerably for buyers. Outwardly, this process sounds like a bargain — but there's a key point you will want to consider. With a PIW, your lender is NOT liable if the assessment is wrong. That's great for lenders, but a disadvantage to the buyer. What could go wrong if I agree to a PIW?The information in Fannie Mae's database is pulled from past appraisals completed by professional appraisers. it might be relatively accurate, but by definition, it will not be a current assessment of the quality of a building that's regularly changing. Without a professional valuation of your home, recent improvements, remodels, or damages can certainly be omitted by the system. Due to these shortcomings, you can imagine a situation where your home is priced too high by the system assessing it. If that happens, you could run into problems when it's time to put it back on the market. You might 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 is the bottom line?An accurate appraisal typically costs a few hundred dollars, but it can save you thousands in the long run. With a Property Inspection Waiver, there's no guarantee that you're receiving an honest valuation of a premium asset. Schuyler Valuation Services can help. Buying or refinancing a home is a big decision with big consequences. You want to know without a doubt that you're receiving a fair deal, and working with a licensed appraiser is the smartest move you can make. Computers and algorithms are in nearly 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. |