Property Inspection Waivers: Are they 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 – or PIW – on your application. The program, introduced by Fannie Mae in 2017, allows you to be approved for a mortgage without needing an appraisal. It's a newer concept, and some lenders love it. But what determined it, and what are the associated risks? 
How does a PIW work?Basically, the task of deciding how much your home is worth falls into the hands of your lender. They determine the value systematically on a computer, employing a database from Fannie Mae rather than hiring a local appraiser to inspect the home you're getting ready to buy. So, rather than a hands-on evaluation, lenders rely solely on computer algorithms to sift through a trove of previously collected data. Get your appraisal from Martindale Appraisal Services today Get a quote onlineWho can get a PIW?The program's currently limited, but it is including more transaction types continuously. Your home needs to have records in Fannie Mae's electronic database, so homes that have never been appraised are not eligible for a Property Inspection Waiver. What's more, you must have an excellent credit score and high assets to be approved. Why is a PIW used?The waiver omits appraisal charges, and it can trim closing time considerably for buyers. At first glance, this process seems like a bargain — but there's an essential point you'll want to recognize. With a PIW, your lender is NOT held responsible if the assessment turns out to be wrong. That's an added bonus for lenders, but offers zero protection to the home buyer whatsoever. What could go wrong if I accept a PIW?The information in Fannie Mae's database is pulled from previous appraisal reports done by professional appraisers. This data might be accurate to a degree, but it won't necessarily be an up-to-date assessment of the exterior and interior quality in a building that changes over time. Without a professional appraisal of your home, new improvements, renovations, or damages can easily be missed by the system. Because of these deficiencies, you can imagine a scenario where your home is priced too high by the system evaluating it. If that happens, you could run into problems when it's time to list it for sale. You could end up settling for less than you paid, and you'll have no recourse against your lender when the money starts adding up. What is the bottom line?A definitive appraisal usually costs a few hundred dollars, but it can save you thousands in the future. With a PIW, there's absolutely no guarantee that you're receiving an honest valuation of a premium asset. Martindale Appraisal Services can help. Buying or refinancing a home is a big decision with grand consequences. You want to 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 are in nearly 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. |