Is a Property Inspection Waiver 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 an appraisal at all. It's a relatively new concept, and some lenders love it. But what caused the change, and what risks are associated? 
How does a PIW work?Basically, what your home is worth is determined by your lender. They determine its value automatically on a computer, employing an online 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 pile of previously collected data. Get your appraisal from AG Real Estate Services today Get a quote onlineWho can receive a PIW?The program is currently limited, but it is including more types of transactions continuously. Your home has to have entries in Fannie Mae's electronic database, so homes that have never been appraised aren't eligible for a PIW. Additionally, you must have an excellent credit score and high assets to be approved. Why is a PIW used?The waiver removes appraisal fees, and it can substantially pare down closing time for buyers. Outwardly, this streamlined process sounds like a good deal — but there's a bottom line you will want to recognize. With a PIW, your lender is NOT held responsible if the valuation ends up wrong. That's an added benefit for lenders, but a disadvantage to the buyer. What could go wrong if I agree to a PIW?The information in Fannie Mae's database is derived from past appraisal reports done by professional appraisers. it might be accurate to a degree, but it won't necessarily be a current evaluation of the quality of a building that's regularly changing. Without a professional valuation of your home, recent improvements and/or damages could absolutely be missed by the system. Due to these shortcomings, you can imagine a situation where your home is valued too high by the program assessing it. If that happens, you could run into problems when it's time to sell. You might not be able to receive what you paid for it, and you'll have no recourse against your lender when the money falls short. What's the bottom line?An accurate appraisal typically costs a few hundred dollars, but it can save you thousands in the long run. With a PIW, there's no guarantee you're getting an honest valuation of a premium asset. AG Real Estate Services can help. Buying or refinancing a property is a big decision with grand consequences. You need to know with certainty that you're getting a fair deal, and working with a licensed appraiser is the safest way to go. 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 precise than the careful assessment of a licensed professional you trust. |