Property Inspection Waivers: Are they really worth the risk?If you're getting a loan for a home, your lender may 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 move forward with your mortgage without an appraisal. It's a newer concept, and some lenders love it. But what caused the change, and what are the risks for you? 
How does a PIW work?Essentially, your lender establishes what your property is worth. They determine the value systematically on a computer, employing an online database from Fannie Mae in lieu of hiring a local appraiser to inspect the home you're about to buy. So, rather than a manual evaluation, lenders rely on computer algorithms to sort through a trove of previously collected data. Get your appraisal from Zaf Appraisals today Get a quote nowWho can receive a Property Inspection Waiver?The program is currently limited, but it is being built regularly to include more transaction types. 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. What's more, you must have an excellent credit score and high assets for approval. Why is a Property Inspection Waiver applied?The waiver omits appraisal expenses, and it can trim closing time substantially for buyers. At first glance, this simplified process sounds like a bargain — but there's a vital point you will want to keep in mind. With a PIW, your lender is NOT liable if the valuation ends up wrong. That's a benefit to lenders, but a disadvantage to the home buyer. What could go wrong if I accept a PIW?The information in Fannie Mae's database is derived from past appraisals completed by professional appraisers. it might be accurate to some extent, but it won't necessarily be a current evaluation of the quality of a building that's regularly changing. Without a professional appraisal of your home, new improvements and/or damages could absolutely be missed by the system. Because of these deficiencies, it's easy to imagine a situation where your home is valued too high by the computer program assessing it. If that happens, you could run into snags when it's time to sell. You could end up getting less than you paid, and you'll have no recourse against your lender when the money falls short. What's the bottom line?An accurate appraisal usually costs a few hundred dollars, but it could save you a lot more in the future. With a PIW, there's no guarantee you're receiving an honest valuation of your most expensive asset. Zaf Appraisals 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 way to go. 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. |
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