Property Inspection Waivers: Are they worth the risk?If you are buying or refinancing a home, your lender may give you the option to use a Property Inspection Waiver (PIW) on your application. The PIW program, initiated by Fannie Mae in 2017, allows you to be approved for a mortgage without an appraisal at all. It's a relatively new concept, and some lenders love it. But what motivated it, and what are the risks for you? 
How does a Property Inspection Waiver work?Essentially, determining what your house is worth falls into the hands of your lender. They determine the value systematically on a computer, employing an online database from Fannie Mae instead of hiring a local appraiser to personally inspect the property you're about to buy. So, rather than a firsthand evaluation, lenders rely solely on computer algorithms to sort through a trove of previously collected information. Get your appraisal from Kiesz & Associates, LLC today Get a quote nowWho is qualified for a Property Inspection Waiver?The program's currently limited, but it's progressively expanding to include more transaction types. Your property needs to have entries in Fannie Mae's electronic database, so homes which have never been appraised aren't eligible for a Property Inspection Waiver. Additionally, you need to have an excellent credit score and high assets to be approved. Why do lenders use PIWs?The waiver eliminates appraisal expenses, and it can considerably shorten closing time for buyers. At first glance, this streamlined process seems like a bargain — but there's a vital point you'll want to recognize. With a PIW, your lender is NOT held liable if the assessment ends up wrong. That's an added benefit for lenders, but awful for the buyer. Is there anything that could go wrong?The information in Fannie Mae's database is pulled from past appraisal reports done by professional appraisers. This data might be accurate to a degree, but it won't necessarily be a current assessment of the quality of a building that changes over time. Without a professional appraisal of your home, new improvements, remodels, or damages can absolutely be omitted by the system. Due to these shortcomings, it's easy to imagine an instance where your property is valued too high by the system evaluating it. If that happens, you could run into issues when it's time to put it back on the market. You may 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?An accurate, professional appraisal typically costs a few hundred dollars, but it can save you a great deal more in the long run. With a PIW, there is simply no guarantee you're receiving an honest valuation of your most expensive asset. Kiesz & Associates, LLC can help. Buying or refinancing a house 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 safest 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. |