What Is A Home Appraisal Waiver?
After you make an offer on a home that the sellers accept, the home appraisal process begins.
This is when an appraiser visits the home and determines how much it is worth in today’s market. An appraiser will study the sales of similar homes in the neighborhood, factor in the age and upkeep of a home and calculate the size of the property, its number of rooms and amenities when determining this value.
If the appraisal comes in too low, the real estate sale might fall through. If you offered $250,000 for a home and the appraiser determines that the property is worth only $200,000, your lender won’t loan you the $250,000 that the sellers have already accepted. To keep the deal alive, you might have to pay the additional $50,000 out of your own pocket or convince the sellers to lower their sales price to $200,000.
If neither of these happen, the deal will fall through, which is why an appraisal can stress both buyers and sellers.
A home appraisal waiver, though, means that you can skip the in-person appraisal. This takes away some of the uncertainty that comes with an appraisal. It can also save you money, as buyers usually pay for the appraisal.
Remember, though, that even if you skip the in-person appraisal, your lender will use other means to determine the value of the home you are buying. Your lender might rely on a recent appraisal of the property, or it might study the sales of nearby comparable homes to come up with a market value for the home.
Many lenders won’t allow appraisal waivers because they don’t want to loan you more mortgage dollars than what the home you are buying is worth. The odds of gaining an appraisal waiver are higher if you are buying in a neighborhood in which there have been several other recent sales, giving your lender comps that they can study to make sure they aren’t loaning too much. You’re more likely to get a waiver, too, if the home you are buying has a recent appraisal, perhaps one ordered by its owners.