Property Inspection Waivers: Are they worth the risk?If you're buying or refinancing a home, your lender might give you the option to use a Property Inspection Waiver – or PIW – on your application. The waiver program, begun by Fannie Mae in 2017, allows you to move forward with your mortgage without needing an appraisal at all. It's a newer concept, and some lenders love it. But what drove it, and what are the associated risks? 
How does a Property Inspection Waiver work?Essentially, the value of your home is determined by your lender. They determine the value systematically on a computer, employing an online 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 entirely on computer methods to sift through a trove of previously collected information. Get your appraisal from Integrated Assets today Get a quote nowWho can get a PIW?The program is currently limited, but it is progressively expanding to include more transaction types. Your home has to have records in Fannie Mae's electronic database, so homes that have never been appraised are not eligible for a PIW. Additionally, you're required to have an excellent credit score and high assets to be approved. Why is a Property Inspection Waiver applied?The waiver eliminates appraisal fees, and it can trim closing time substantially for buyers. On the surface, this process sounds like a good deal — but there's an essential point you will want to keep in mind. With a PIW, your lender is NOT liable if the assessment winds up being wrong. That's great for lenders, but affords zero protection to the buyer whatsoever. What could go wrong?The information in Fannie Mae's database is derived from previous appraisal reports completed by professional appraisers. This data might be accurate to some extent, but it won't necessarily be an up-to-date evaluation of the quality of a building that changes from year by year. Without a professional appraisal of your home, new improvements and/or damages can absolutely be neglected by the system. Due to these deficiencies, you can imagine a situation where your home is valued too high by the program evaluating it. If that happens, you could run into problems when it's time to list it for sale. You may not be able to get what you paid for it, and you'll have no recourse against your lender when the money starts adding up. What's the bottom line?A definitive appraisal usually costs a few hundred dollars, but it can save you a substantial amount more in the future. With a PIW, there is no guarantee you're getting an honest valuation of your most expensive asset. Integrated Assets can help. Buying or refinancing a home 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 smartest 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 home, nothing is more precise than the careful assessment of a licensed professional you trust. |