Don't risk your investment with a Property Inspection WaiverIf you are getting a loan for a home, your lender might give you the option to use a Property Inspection Waiver – or PIW – on your application. The program, initiated by Fannie Mae in 2017, allows you to move forward with your mortgage without an appraisal at all. It's a newer concept, and some lenders love it. But what prompted the change, and what risks are there for you as a home buyer? 
How does a Property Inspection Waiver work?Essentially, your lender decides what your house is worth. 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 home you're about to buy. So, rather than a manual evaluation, lenders rely on computer processes to sort through an array of previously collected data. Get your appraisal from John K. Emery, CREA today Get a quote nowWho can get a Property Inspection Waiver?The program is currently limited, but it is being expanded regularly to include more transaction types. Your property has to have entries in Fannie Mae's electronic database, so homes which have never been appraised are not eligible for a Property Inspection Waiver. Additionally, you're required to have an excellent credit score and high assets for approval. Why is a PIW applied?The waiver omits appraisal fees, and it can shorten closing time substantially for buyers. At first glance, this process sounds like a bargain — but there's a bottom line you'll want to recognize. With a PIW, your lender is NOT held responsible if the assessment is wrong. That's an added bonus for lenders, but a disadvantage to the home buyer. What could happen if I agree to a Property Inspection Waiver?The information in Fannie Mae's database is derived from past appraisals done by professional appraisers. This data might be somewhat accurate, but by definition, it will not be a current evaluation of the exterior and interior quality in a building that changes over time. Without a professional appraisal of your home, recent improvements and/or damages could easily be left out by the system. Because of these deficiencies, you can imagine a scenario where your home is priced too high by the computer program assessing it. If that happens, you could run into snags 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?An accurate, professional appraisal usually costs a few hundred dollars, but it can save you a substantial amount more in the future. With a PIW, there's no guarantee that you're receiving an honest valuation of your most expensive asset. John K. Emery, CREA can help. Buying or refinancing a house is a big decision with big consequences. You should know with certainty that you're receiving a fair deal, and working with a licensed appraiser is the smartest 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 property, nothing is more accurate than the careful assessment of a licensed professional you trust. |