Property Inspection Waivers: Are they really worth the risk?If you're getting a loan for a home, your lender might give you the option to use a Property Inspection Waiver (PIW) on your loan application. The waiver program, begun by Fannie Mae in 2017, allows you to be approved for a mortgage without an appraisal. It's a newer concept, and some lenders love it. But what prompted the change, and what are the risks for you as a home buyer? 
How do PIWs work?Basically, your lender decides what your property is worth. They determine its value systematically on a computer, using a database from Fannie Mae instead of hiring a local appraiser to inspect the property you're about to buy. So, rather than a firsthand evaluation, lenders rely on computer algorithms to sort through a pile of previously collected data. Get your appraisal from Kesterson Appraisal Services today Get a quote onlineWho's qualified for a Property Inspection Waiver?The program is limited currently, but it is being expanded continually to include more transaction types. Your property needs to have records in Fannie Mae's electronic database, so homes that have never been appraised aren't eligible for a PIW. Additionally, you're required to have an excellent credit score and high assets to be approved. Why do lenders use Property Inspection Waivers?The waiver eliminates appraisal expenses, and it can shorten closing time substantially for buyers. At first glance, this streamlined process sounds like a bargain — but there's an essential point you'll want to keep in mind. With a PIW, your lender is NOT held responsible if the valuation winds up being wrong. That's a bonus for lenders, but offers zero protection to the buyer whatsoever. What could go wrong if I accept a Property Inspection Waiver?The information in Fannie Mae's database is pulled from past appraisal reports done by professional appraisers. This data might be accurate to some extent, but by definition, it won't be a current assessment of the quality of a building that changes from year by year. Without a professional appraisal of your home, recent improvements and/or damages could certainly be missed by the system. Due to these deficiencies, you can imagine an instance 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 list it for sale. You could wind up settling for far less than you paid, and you'll have no recourse against your lender when the money starts adding up. What is the bottom line?An accurate, professional appraisal typically costs a few hundred dollars, but it can save you a great deal more 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. Kesterson Appraisal Services can help. Buying or refinancing a property 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 safest action you can take. Computers and algorithms have assumed a place in almost every area of modern life, but when it comes to measuring the value of your property, nothing is more accurate than the careful assessment of a licensed professional you trust. |