As a Realtor you may think great, NO appraisal! No worries..Not so fast!
As a Buyer you may think great no appraisal...that saves me money and that must mean the home I am purchasing is worth what I am paying....Not So Fast!
What is a PIW? (It is a misnomer for one). It means that Fannie has decided the buyer and property are a good risk and waives the Appraisal on the home. They accept the estimate of the home provided by Lender as valid. "A prior appraisal has to be in the Fannie MAE CU (Collateral Underwriter File...for a waiver to be offered)." THIS PRIOR APPRAISAL MAY OR MAY NOT BE ACCEPTABLE FOR A HOST OF REASONS and a prior apraisal should NOT in my opinionhave any bearing on a CURRENT valuation of the property.
So you are a Realtor and you are thinking great I do not have to worry about an appraisal killing my deal. IF you are a Buyer's Realtor you need to have their best interest at heart and not let them over pay or it could come back to haunt you.
In this law suit happy world you need to be very careful. If your buyer gets a PIW on that loan at the very least you need to suggest to the buyer to get their OWN appraisal. Then you need to document your file and let them decide. As part of the recommendation you need to tell them that a PIW does NOT mean the home is CURRENTLY worth what they are paying since they are relying on prior appraisal data and other valuation vehichles other than an appraisal.
The only way a buyer truly knows current value is by getting an appraisal OR taking your word for it based upon your data. Not a wise choice because if later down the road they decide they paid too much and no one told them that they had the choice of getting their OWN appraisal, guess who they will come after first...THE REALTOR.
As a buyer, many may think the lender has decided that their home is worth the sales price. This is NOT true. They are relying on prior data that may be flawed and outside valuation sources and not an actual appraisal.
So while many may be thrilled with the prospect of a PIW. Think twice, protect your buyers and do the right thing! ADVISE your buyers to get their own appraisal and then if they decide NO, you have done your duty to so advise. This should also be the case with CASH buyers!
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