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 (PIW) on your loan application. The waiver program, introduced by Fannie Mae in 2017, allows you to be approved for a mortgage without needing an appraisal at all. It's a newer concept, and some lenders love it. But what prompted it, and what are the risks for you as a home buyer? 
How does a Property Inspection Waiver work?Basically, deciding what your property is worth falls into the hands of your lender. They determine its value automatically on a computer, employing an online database from Fannie Mae rather than hiring a local appraiser to inspect the property you're getting ready to buy. So, rather than a hands-on evaluation, lenders rely solely on computer processes to sort through a bank of previously collected information. Get your appraisal from Integrated Assets today Get a quote todayWho is qualified for a PIW?The program is limited currently, but it's including more types of transactions regularly. Your property needs to have records in Fannie Mae's electronic database, so homes that have never been appraised aren't eligible for a PIW. What's more, you're required to have an excellent credit score and high assets for approval. Why is a Property Inspection Waiver used?The waiver removes appraisal fees, and it can cut closing time substantially for buyers. On the surface, this process sounds like a bargain — but there's an essential point you'll want to consider. With a PIW, your lender is NOT held liable if the assessment turns out to be wrong. That's a benefit to lenders, but awful for the buyer. What could go wrong if I agree to a Property Inspection Waiver?The information in Fannie Mae's database is derived from past appraisal reports completed by professional appraisers. it might be relatively accurate, but it won't necessarily be a current evaluation of the exterior and interior quality in a building that changes over time. Without a professional valuation of your home, new improvements and/or damages could absolutely be neglected by the system. Due to these deficiencies, it's easy to imagine a situation where your property is valued too high by the program evaluating it. If that happens, you could run into issues when it's time to list it for sale. You might not be able to get what you paid for it, and you'll have no recourse against your lender when the money falls short. What is the bottom line?A definitive appraisal usually costs a few hundred dollars, but it can save you thousands (or tens of thousands) in the future. With a Property Inspection Waiver, there is simply no guarantee that you're receiving an honest valuation of a premium asset. Integrated Assets can help. Buying or refinancing a house is a big decision with big consequences. You need to know without a doubt that you're getting a fair deal, and working with a licensed appraiser is the safest action you can take. Computers and algorithms have assumed a place in nearly every area of modern life, but when it comes to measuring the value of your home, nothing is more accurate than the careful assessment of a licensed professional you trust. |