What Is An Appraisal Waiver
Appraisal Waivers save time, money & hassle for our clients but what actually is one and how does it work?
What is an appraisal waiver?
An appraisal waiver, also known as a Property Inspection Waiver (PIW) or Value Acceptance, is an agreement between a lender and a borrower that allows the borrower to skip the in-person appraisal of a property for purchase or refinance transaction. Instead, the lender will use other methods to determine the home’s value, such as:
- A comparative market analysis (CMA)
- Automated underwriting systems, such as Fannie Mae’s Desktop Originator or Freddie Mac’s Loan Prospector
- Automated Valuation Model (AVM)
Appraisal waivers can save buyers time and money, but they also come with risks:
- Benefits: Buyers can close on a property purchase or refinance faster and they don’t have to pay for an appraisal.
- Risks; Buyers run the risk of overpaying for the home if making a purchase though not as common with modern valuation practices.
What influences the liklihood of receiving Appraisal waiver?
Appraisal waivers are granted based on the lenders discretion however there are several factors that influence a borrowers eligibility to qualify including:
- Loan To Value Ratio (LTV)
- LTV plays a big part on whether an Appraisal waiver will be offered, in most scenarios an LTV of 80% or lower increases a borrowers likelihood of receiving a waiver.
- Loan Type
- Conventional and FHA loans allow use of appraisal waivers while VA & Construction loans often do not.
- Appraisal History
- Properties with a recent appraisal or sale history are often times more likely to receive a waiver.
How does an Appraisal Waiver work?
Appraisal waivers use an alternative method to determine a properties value. Most often by utilizing an Automated Valuation Model (AVM).
- Your mortgage professional will determine whether you and your property is eligible for a waiver.
- If your transaction is eligible than you will receive a disclosure explaining how the properties value was assessed and if you except the value than you can move onto the next step of the mortgage process without waiting for an in person appraisal.
What if I don’t agree with the assessed value?
If you receive a waiver but don’t agree with the determined value than you can still request a traditional appraisal. Often times this scenario arises due to the following:
- Recent interior or exterior renovations have been completed and are not reflected in the the alternative evaluation assessment.
- Recent comparable sales or pending sales included in the assessment are not accurate to the transactions property.
Reach out to us any time to learn more about our loan options, We’re always available & here to provide expert guidance and support for you!
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