Property Inspection Waivers: 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 – or PIW – on your loan application. The PIW program, initiated by Fannie Mae in 2017, allows you to be approved for a mortgage without requiring an appraisal at all. It's a newer concept, and some lenders love it. But what determined the change, and what risks are associated? 
How do Property Inspection Waivers work?Essentially, your lender determines what your house is worth. They determine the value systematically on a computer, employing a database from Fannie Mae in lieu of hiring a local appraiser to inspect the property you're about to buy. So, rather than a manual evaluation, lenders rely on computer methods to sort through a trove of previously collected information. Get your appraisal from TK Valuations, Inc. today Get a quote todayWho can get a Property Inspection Waiver?The program is limited right now, but it is expanding regularly to include more types of transactions. Your property needs to have records in Fannie Mae's electronic database, so homes that have never been appraised are not eligible for a Property Inspection Waiver. Additionally, you need to have an excellent credit score and high assets to be approved. Why is it applied?The waiver cancels out appraisal expenses, and it can substantially reduce closing time for buyers. On the surface, this simplified process sounds like a bargain — but there's a crucial point you will want to consider. With a PIW, your lender is NOT liable if the assessment ends up wrong. That's an added benefit for lenders, but terrible for the buyer. What could go wrong if I accept a PIW?The information in Fannie Mae's database is pulled from past appraisal reports completed by professional appraisers. it might be accurate to a degree, but by definition, it will not be a current assessment of the exterior and interior quality in a building that's regularly changing. Without a professional valuation of your home, recent improvements and/or damages could easily be overlooked by the system. Because of these deficiencies, you can imagine a scenario where your property is valued too high by the program assessing it. If that happens, you could run into problems when it's time to sell. You may 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's the bottom line?A definitive appraisal typically costs a few hundred dollars, but it could save you thousands (or tens of thousands) in the long run. With a Property Inspection Waiver, there is absolutely no guarantee that you're receiving an honest valuation of a premium asset. TK Valuations, Inc. can help. Buying or refinancing a property is a big decision with big consequences. You demand to know with certainty that you're getting a fair deal, and working with a licensed appraiser is the smartest way to go. Computers and algorithms have assumed a place in nearly every area of modern life, but when it comes to measuring the value of your property, nothing is more accurate than the careful examination of a licensed professional you trust. |