Is a Property Inspection Waiver worth the risk?If you are buying or refinancing a home, your lender might give you the option to use a Property Inspection Waiver – or PIW – on your loan application. The PIW program, introduced by Fannie Mae in 2017, allows you to move forward with your mortgage without an appraisal. It's a newer concept, and some lenders love it. But what determined it, and what risks are there for you as a home buyer? 
How does a PIW work?Basically, your lender establishes what your house is worth. They determine the value automatically on a computer, using an online database from Fannie Mae rather than hiring a local appraiser to personally 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 bank of previously collected information. Get your appraisal from Absolute Appraisals LLC today Get a quote nowWho is qualified for a PIW?The program is currently limited, but it is being expanded regularly to include more transaction types. Your property needs to have entries in Fannie Mae's electronic database, so homes that have never been appraised are not eligible for a Property Inspection Waiver. Additionally, you must have an excellent credit score and high assets to be approved. Why do lenders use PIWs?The waiver cancels out appraisal fees, and it can cut closing time considerably for buyers. Outwardly, this process seems like a good deal — but there's an essential point you will want to consider. With a PIW, your lender is NOT held liable if the assessment turns out to be wrong. That's an added bonus for lenders, but terrible for the buyer. Could anything go wrong?The information in Fannie Mae's database is derived from previous appraisal reports completed by professional appraisers. This data might be somewhat accurate, but by definition, it won't be a current evaluation of the exterior and interior quality in a building that changes from year to year. Without a professional valuation of your home, recent improvements and/or damages can easily be overlooked by the system. Because of these deficiencies, you can imagine a scenario where your home is valued too high by the computer program evaluating it. If that happens, you could run into snags 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?An accurate appraisal usually costs a few hundred dollars, but it can save you a lot more in the future. With a PIW, there's absolutely no guarantee you're getting an honest valuation of your most expensive asset. Absolute Appraisals LLC can help. Buying or refinancing a home is a big decision with grand consequences. You want to know without a doubt that you're receiving a fair deal, and working with a licensed appraiser is the safest action you can take. 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 accurate than the careful assessment of a licensed professional you trust. |