Property Inspection Waivers: Are they worth the risk?If you are buying or refinancing a home, your lender might give you the option to use a Property Inspection Waiver (PIW) on your application. The waiver program, started by Fannie Mae in 2017, allows you to be approved for a mortgage without requiring an appraisal at all. It's a relatively new concept, and some lenders love it. But what motivated it, and what risks are associated? 
How does a PIW work?Basically, the task of deciding what your property is worth falls into the hands of your lender. They determine its value automatically on a computer, using an online database from Fannie Mae in lieu of hiring a local appraiser to inspect the property you're getting ready to buy. So, rather than a firsthand evaluation, lenders rely on computer processes to sort through a pile of previously collected information. Get your appraisal from H.M. Hoffman & Company today Get a quote nowWho can get a Property Inspection Waiver?The program is limited currently, but it is building continually to include more types of transactions. Your home needs to have records in Fannie Mae's electronic database, so homes which 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 it?The waiver eliminates appraisal fees, and it can shorten closing time substantially for buyers. Outwardly, this streamlined process seems like a bargain — but there's a vital point you will want to keep in mind. With a PIW, your lender is NOT held liable if the assessment winds up being wrong. That's a benefit to lenders, but presents no protection to the buyer whatsoever. What could happen if I accept a Property Inspection Waiver?The information in Fannie Mae's database is pulled from previous appraisal reports completed by professional appraisers. it might be relatively accurate, but it won't necessarily be a current assessment of the quality of a building that changes from year by year. Without a professional valuation of your home, new improvements and/or damages could certainly be left out by the system. Because of these deficiencies, you can imagine a situation where your home is priced too high by the system evaluating it. If that happens, you could run into snags 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's the bottom line?A definitive appraisal typically costs a few hundred dollars, but it can save you thousands in the future. With a Property Inspection Waiver, there's absolutely no guarantee you're getting an honest valuation of your most expensive asset. H.M. Hoffman & Company can help. Buying or refinancing a house is a big decision with big consequences. You should know without a doubt that you're receiving a fair deal, and working with a licensed appraiser is the safest move you can make. 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 precise than the careful examination of a licensed professional you trust. |