Are Property Inspection Waivers worth the risk?If you're buying or refinancing a home, your lender may give you the option to use a Property Inspection Waiver – or PIW – on your loan application. The PIW program, initiated by Fannie Mae in 2017, allows you to be approved for a mortgage without requiring an appraisal. It's a relatively new concept, and some lenders love it. But what drove it, and what are the associated risks? 
How does a PIW work?Basically, the value of your property is determined by your lender. They determine the value automatically on a computer, using a database from Fannie Mae instead of hiring a local appraiser to inspect the property you're getting ready to buy. So, rather than a manual evaluation, lenders rely on computer processes to sift through a pile of previously collected information. Get your appraisal from Appraisal Services, Inc. today Get a quote todayWho is eligible for a Property Inspection Waiver?The program's currently limited, but it is including more transaction types continuously. Your property has to have records in Fannie Mae's electronic database, so homes that have never been appraised are not eligible for a PIW. What's more, you must have an excellent credit score and high assets to be approved. Why is a Property Inspection Waiver used?The waiver removes appraisal charges, and it can considerably shorten closing time for buyers. Outwardly, this simplified 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 held liable if the assessment is wrong. That's great for lenders, but awful for the buyer. What could go wrong?The information in Fannie Mae's database is derived from previous appraisals completed by professional appraisers. it might be relatively accurate, but it won't necessarily be an up-to-date evaluation of the exterior and interior quality in a building that's regularly changing. Without a professional appraisal of your home, recent improvements and/or damages can certainly be overlooked by the system. Due to these deficiencies, it's easy to imagine a scenario where your property is valued too high by the computer program evaluating it. If that happens, you could run into snags when it's time to put it back on the market. You may not be able to get what you paid for it, 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 could save you a lot more in the future. With a Property Inspection Waiver, there is absolutely no guarantee that you're getting an honest valuation of a premium asset. Appraisal Services, Inc. can help. Buying or refinancing a home is a big decision with big consequences. You need to know without a doubt that you're receiving a fair deal, and working with a licensed appraiser is the smartest 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 precise than the careful examination of a licensed professional you trust. |