Property Inspection Waivers: Are they worth the risk?If 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 PIW program, begun by Fannie Mae in 2017, allows you to be approved for a mortgage without needing an appraisal. It's a newer concept, and some lenders love it. But what caused it, and what are the risks for you as a home buyer? 
How does a Property Inspection Waiver work?Basically, your lender establishes what your property is worth. They determine the value systematically on a computer, employing an online database from Fannie Mae instead of hiring a local appraiser to inspect the home you're getting ready to buy. So, rather than a firsthand evaluation, lenders rely on computer methods to sift through a bank of previously collected information. Get your appraisal from Multi-Task Properties today Get a quote todayWho can get a Property Inspection Waiver?The program's currently limited, but it's building regularly to include more transaction types. Your property has to have entries in Fannie Mae's electronic database, so homes that have never been appraised aren't eligible for a Property Inspection Waiver. What's more, you must have an excellent credit score and high assets to be approved. Why do lenders use PIWs?The waiver removes appraisal expenses, and it can trim closing time considerably for buyers. On the surface, this streamlined process sounds like a good deal — but there's a bottom line you will want to keep in mind. With a PIW, your lender is NOT held liable if the valuation is wrong. That's a benefit to lenders, but affords zero protection to the home buyer whatsoever. What could go wrong?The information in Fannie Mae's database is pulled from past appraisals completed by professional appraisers. it might be accurate to some extent, 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 left out by the system. Because of these deficiencies, you can imagine a situation where your home is valued too high by the computer program assessing it. If that happens, you could run into issues when it's time to sell. You could end up getting far 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 great deal more in the future. With a PIW, there is clearly no guarantee that you're getting an honest valuation of a premium asset. Multi-Task Properties can help. Buying or refinancing a property is a big decision with big consequences. You need to 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 property, nothing is more accurate than the careful assessment of a licensed professional you trust. |