Property Inspection Waivers: Are they really worth the risk?If you're getting a loan for a home, your lender may give you the option to use a Property Inspection Waiver – or PIW – on your application. The PIW 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 drove it, and what are the associated risks? 
How does a PIW work?Basically, determining what your property is worth falls into the hands of your lender. They determine the value automatically on a computer, using a database from Fannie Mae rather than hiring a local appraiser to inspect the property you're getting ready to buy. So, rather than a firsthand evaluation, lenders rely solely on computer algorithms to sift through an array of previously collected data. Get your appraisal from Pendley & Pendley Appraisers today Get a quote nowWho can get a PIW?The program's limited currently, but it is building 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 aren't eligible for a PIW. What's more, you must have an excellent credit score and high assets for approval. Why is a PIW applied?The waiver omits appraisal charges, and it can shorten closing time substantially for buyers. On the surface, this simplified process seems like a bargain — but there's a bottom line you will want to keep in mind. With a PIW, your lender is NOT liable if the assessment is wrong. That's a bonus for lenders, but presents no protection to the buyer. Is there anything that could go wrong?The information in Fannie Mae's database is pulled from previous appraisals done by professional appraisers. it might be somewhat accurate, but it won't necessarily be an up-to-date evaluation of the exterior and interior quality in a building that's regularly changing. Without a professional appraisal of your home, recent improvements and/or damages can absolutely be left out by the system. Due to these deficiencies, it's easy to imagine a situation where your property is valued too high by the system assessing it. If that happens, you could run into snags when it's time to list it for sale. You could end up getting less than you paid, and you'll have no recourse against your lender when the money falls short. What's the bottom line?A definitive appraisal usually costs a few hundred dollars, but it could save you a substantial amount more in the future. With a PIW, there is clearly no guarantee you're receiving an honest valuation of a premium asset. Pendley & Pendley Appraisers can help. Buying or refinancing a property is a big decision with big consequences. You demand to know without a doubt that you're receiving a fair deal, and working with a licensed appraiser is the smartest move you can make. Computers and algorithms are 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. |