Are Property Inspection Waivers worth the risk?If you are 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 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 drove the change, and what risks are there for you? 
How does a PIW work?Basically, your lender determines what your house is worth. They determine the value automatically on a computer, employing a database from Fannie Mae in lieu of hiring a local appraiser to inspect the home you're getting ready to buy. So, rather than a manual evaluation, lenders rely on computer algorithms to sort through a bank of previously collected information. Get your appraisal from Integrated Assets today Get a quote onlineWho can receive a Property Inspection Waiver?The program's limited right now, but it's including more transaction types regularly. Your home has to have records in Fannie Mae's electronic database, so homes which 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 do lenders use Property Inspection Waivers?The waiver omits appraisal charges, and it can trim closing time considerably for buyers. At first glance, this simplified process seems like a bargain — but there's a bottom line you'll want to consider. With a PIW, your lender is NOT held responsible if the assessment is wrong. That's a benefit to lenders, but affords no protection to the buyer whatsoever. Is there anything that could go wrong?The information in Fannie Mae's database is derived from past appraisal reports done by professional appraisers. it might be accurate to a degree, 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, recent improvements, renovations, or damages could absolutely be missed by the system. Due to these shortcomings, you can imagine an instance where your property is priced too high by the program assessing it. If that happens, you could run into problems when it's time to put it back on the market. You might not be able to receive what you paid for it, 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 could save you thousands (or tens of thousands) in the future. With a PIW, there is clearly no guarantee that you're getting an honest valuation of a premium asset. Integrated Assets can help. Buying or refinancing a house is a big decision with big consequences. You want to know without a doubt that you're getting a fair deal, and working with a licensed appraiser is the smartest move you can make. 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 assessment of a licensed professional you trust. |