SCV Appraisal Blog

November 28th, 2017 12:54 PM

Don't risk your home with a Property Inspection Waiver

If you are buying or refinancing a home, your lender may give you the option to use a Property Inspection Waiver (PIW) on your application. The program, introduced by Fannie Mae in 2017, allows you to be approved for a mortgage without getting an appraisal at all. It's a relatively new concept, and some lenders love it. But what drove the change, and what risks are there for you as a home buyer?

We can help with measurement services

How do PIWs work?

Basically, the task of deciding what your home is worth falls into the hands of your lender. They determine the value automatically on a computer, employing a database from Fannie Mae instead of hiring a local appraiser to personally inspect the home you're getting ready to buy. So, rather than a manual evaluation, lenders rely entirely on computer algorithms to sort through an array of previously collected information.

Get your appraisal from SCV Appraisal Service today

Get a quote online

Who can get a PIW?

The program is limited right now, but it is including more transaction types continuously. Your home has to have records in Fannie Mae's electronic database, so homes which have never been appraised aren't eligible for a PIW. Additionally, you're required to have an excellent credit score and high assets to be approved.

Why is a Property Inspection Waiver applied?

The waiver removes appraisal expenses, and it can substantially shorten closing time for buyers. On the surface, this process sounds like a good deal — but there's an essential point you will want to keep in mind. With a PIW, your lender is NOT held responsible if the assessment turns out to be wrong. That's an added bonus for lenders, but a disadvantage to the home buyer.

What could go wrong if I agree to a Property Inspection Waiver?

The information in Fannie Mae's database is pulled from previous appraisals completed by professional appraisers. This data might be accurate to some extent, but it won't necessarily be a current evaluation of the quality of a building that's constantly changing. Without a professional valuation of your home, new improvements and/or damages can easily be left out by the system.

Due to these deficiencies, it's easy to imagine a situation where your property is valued too high by the program assessing it. If that happens, you could run into issues when it's time to put it back on the market. You could end up settling for 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 can save you a substantial amount more in the long run. With a PIW, there's simply no guarantee that you're receiving an honest valuation of your most expensive asset.

SCV Appraisal Service can help.

Buying or refinancing a house is a big decision with big consequences. You want to know with certainty that you're getting a fair deal, and working with a licensed appraiser is the smartest action you can take. 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 accurate than the careful assessment of a licensed professional you trust.

Posted in:General
Posted by Anthony Barrett on November 28th, 2017 12:54 PMLeave a Comment

Subscribe to this blog
January 7th, 2016 8:58 AM

The procedure appraisers use to make market adjustments for a perceived difference in comparable properties in a set of sales is obviously called an adjustment. However, the process is called paired sales analysis and is often not fully understood by those surrounding the appraisal industry.  

As much as I would like to share a chart that the appraisal industry has agreed upon as standard numeric values for adjustments made to comparable sales for differences in property features, it just does not exist. Only through an analysis of a specific set of comparable sales and the driving factors of determining agreed upon sale prices can you begin to understand value differences between those sales.  The process for making adjustments has to match as closely as possible the process those buyers and sellers go through when agreeing on a sales price for a specific piece of real estate.  This process varies dramatically from market to market as well as different price points within those markets and is dependent on market conditions, inventory levels and buyer and seller motivations.

The principle of paired sales analysis states in its simplest form that if two sales are identical with the exception of one feature that the difference in price must be attributed to that feature. However, in residential real estate much like one sale does not set values for a market, one market adjustment does not necessarily set value for that feature. The concept of paired sales is most accurate when performed over a set of multiple sales in a manner that best reflects the actions of buyers and sellers in that set. We must realize that buyers and sellers do not operate this way and in the end we are not attempting to value these features but rather the real estate as a whole and these adjustments allow the appraiser to apply a weighted reconciliation to a value conclusion based on the adjusted set of sales.

 This is not to say that the answer to the question, what type of return will the installation of a pool bring when I resell, is unattainable. It is just that other questions will need to be answered as well. When do you plan on selling? What will the market look like when you sell? Who is the perspective buyer you plan to sell to, investor, owner occupant? The answers to these types of questions are market, neighborhood, and tract and may even be street specific. That is why it is important when dealing with a real estate valuation issue you seek a local expert.

Posted in:General
Posted by Anthony Barrett on January 7th, 2016 8:58 AMLeave a Comment

Subscribe to this blog

When doing FHA appraisals HUD has established a set on minimum property standards with regard to the property condition and health and safety issues in and around the property that the appraiser is asked to confirm at the inspection. Most of these issues do not present a problem for those involved in the transaction as most of the homes sold in our Valley are in good condition and generally do not present problems for FHA/HUD in meeting FHA minimum property standards. Occasionally I run across a home that to the untrained eye may appear adequate for FHA but something minor that may have been overlooked by the realtors or the home owners and may delay the loan and require repair.

These items that I’m pointing out are the small issues that will delay the loan and with a little bit of forethought, knowledge and planning these delays can be avoided.

1.       Utilities not on during inspection. All the utilities need to be on and operational when the appraiser goes out to do the inspection. FHA requires appraisers to turn on appliances when safe to do so and verify that they are operational. This includes: heating/cooling systems, range, dishwashers, lighting, plumbing items such as faucets and toilets.

2.       Missing appliances. As an example:  If there is a space for a dishwasher, then HUD requires it and must be operational. 

3.       Exposed or uncapped wiring. This is a safety issue for FHA and if there is dangling wiring, it needs to be capped and not exposed.

4.       Excessive debris in or around the property that may be toxic or prevent access.

5.       Chipped and or peeling paint in homes built prior to 1978.

6.       Missing Carbon Monoxide detectors or smoke alarms. This is a common issue in the last year and I see many Realtors carrying them in their cars, that is good but remember one needs to installed servicing each sleeping area. If there are bedrooms on both sides of the house, one needs to be installed in each area.

7.       Attic space clearance. The appraiser will need to a head and shoulder inspection of the attic space. Please make sure there is adequate access to both the attic and crawl space if there is a crawl space. I have seen attic spaces painted shut or access impossible due to furniture, debris and those stackable storage containers. Inability to gain access will be conditioned and delay the loan.

8.       Standing water against the foundation of the home.

9.       Unstrapped water heater. I don’t see this much anymore but it’s worth verifying before the appraiser comes out.

10.   Broken Glass. Be it a window or shower door, if it’s broken with exposed edges it will need to be repaired.

These are the ten most common FHA issues that I run across that are easily fixed and should be dealt with prior to the appraiser coming out to the property. I hope this helps and feel free to contact me for a more detailed list @

Posted by Anthony Barrett on January 7th, 2016 8:43 AMLeave a Comment

Subscribe to this blog

The top questions to ask your REALTOR®

There is no shortage of qualified agents to help you sell your home. Here are some things to think about while choosing one — and questions to ask the finalists.

  • How will you market my home? How many people are likely to see the listing? Is it more important to you to provide as much information as possible about my home to website visitors or to entice them into calling you to learn more?
  • You do have a website, don't you? How do you maximize a listing's online exposure?
  • How long have you been selling homes in this area? In this neighborhood? About how many have you sold?
  • What is the biggest selling point of my home (or of a home in my general area)? What will be the biggest challenge? How will you deal with less appealing features in your marketing and sales?
  • What is your negotiating and sales style? Have you ever found a seller difficult to work with? If so, why? Did you sell the home anyway?
  • Can I have the names of some past clients? Not necessarily the difficult ones.

Don't be shy about asking tough but fair questions when looking to hire a real estate agent. You're trusting them with your largest asset!

We have much more real estate information and advice available at our website. Visit today and keep us in mind if we can ever serve your appraisal needs.

Anthony J Barrett
Southland Appraisal Service

Posted in:General
Posted by Anthony Barrett on June 11th, 2007 6:40 PMLeave a Comment

Subscribe to this blog
June 10th, 2007 10:11 AM
An appraiser is one who compiles and analyzes voluminous data of problematical accuracy from sources of dubious veracity and derives there from a numerical quantification of unquestionable necessity, analogous to a nebelous and euphemistic concept representational of value commensurate with ambient configurations of the open market and promulgates thereby a precise written declamation which delineates his observation, deliberations and conclusions all done while he feighns absolute ignorance of the avericious machinations of Buyers, Sellers, Brokers and Lenders, compensated only by that penurious stipend known as the professional fee.  - Original Author Unknown

Posted in:General
Posted by Anthony Barrett on June 10th, 2007 10:11 AMLeave a Comment

Subscribe to this blog

By Brynn Galindo,
May 23, 2007

New numbers on home foreclosures in the metropolitan Bakersfield area, and they’re up—way up.

We checked with the people who publish legal notices and they said there’s been an alarming spike in notices of default and trustee sales.

These numbers are provided to us by Ann Marino, owner of the Daily Report.

There were just over 2,400 notices of default on home mortgages in Bakersfield during the last five-and-a-half months—a nearly 300 percent increase over the same period last year.

There were 1,140 notices of trustees sales from January through May of this year, compared to just 281 during the same period last year.

Posted in:General
Posted by Anthony Barrett on June 2nd, 2007 10:10 AMLeave a Comment

Subscribe to this blog
April 22nd, 2007 3:41 PM
By Kenneth R. Harney, Washington Post Writers Group
April 22, 2007

WASHINGTON — Have inflated appraisals helped fuel the current surge in foreclosures by credit-strapped borrowers? Are they at the core of many mortgage fraud schemes?

The four largest trade groups representing appraisers say yes — and they are asking federal financial regulators to crack down on lenders and loan officers who pressure appraisers to raise valuations to allow overpriced deals to go through.

Led by the 22,000-member Appraisal Institute, the groups told regulators April 11 that sub-prime lenders experiencing high rates of foreclosures often have been guilty of "systematic inattention" to the accuracy and the sources of the valuations backing the mortgages they funded.

Such lenders:

•  Bought loans with zero or minimal down payments without taking a hard look at the qualifications and track records of appraisers supplying the numbers. Yet in softening housing markets, accuracy on property valuations is essential whenever down payments are tiny and borrowers' credit histories are shaky. A zero-down mortgage made to unqualified buyers on a house worth thousands less than the appraisal in a depreciating market is a financial disaster waiting to happen.

•  Failed to require "firewalls" separating loan officers working on commission from the appraisers hired to value the properties to be financed. National studies repeatedly have shown that commissioned loan officers often demand that appraisers cooperate to hit whatever number is needed to push the transaction to closing — or lose all future business.

Ninety percent of the appraisers in a 2006 national survey by October Research Corp. said they had experienced threats, nonpayment of fees and other forms of coercion. Many said they had lost business by refusing to play the game.

Lender complacency about appraisals also has enabled con artists to bilk banks and investors of billions of dollars in home mortgage fraud schemes. The four appraiser groups cited FBI estimates that mortgage fraud losses are now approaching $3 billion a year — and many of those schemes start with intentionally inflated property valuations that lenders fail to spot.

A senior member of the Appraisal Institute provided an inside look at one type of scam that is turning up across the country. It's called "cash out at closing" and uses overstated property valuations as the starting point.

Gary Crabtree, president of Affiliated Appraisers in Bakersfield, documented the practice recently for the FBI and state financial and real estate regulators. The basic scenario, Crabtree said, involves realty agents who've listed houses that aren't selling. To move the properties, they entice buyers or friends to "submit an offer [for the home] that is $30,000 to $100,000 above the current list price," with the promise that they'll get substantial cash at closing.

The realty agents then amend the Multiple Listing Service asking price upward to the artificially inflated offer price. A house that had been sitting for months with no takers at $450,000, for example, might be re-listed by the agent at $525,000.

Then, working with a cooperative appraiser who has promised to "hit the number," and an unscrupulous mortgage broker, they change the loan documentation to reflect the artificially inflated sales price. The loans typically are for 100% of the price of the house. The seller nets the price he or she originally listed at — $450,000 in this example — and the buyer gets a portion or all of the $75,000 inflated differential as cash at closing.

The wholesale lender purchasing the loan from the broker doesn't look hard at the appraisal and funds the excessive loan amount none the wiser. Public records do not reflect the $75,000 slush in the transaction. The realty agents and loan brokers pocket their commissions; the buyer pockets the cash from the closing proceeds, makes loan payments for a while and then stops. Within months, the property is headed to foreclosure.

"It's total fraud, of course," said Crabtree, who is documenting 32 cases of alleged appraisal hanky-panky for state regulators and the FBI.

Yet some lenders are in denial that they've accepted grossly inflated appraisals. Crabtree said he contacted one major East Coast lender with the documented details of a "cash-back-at-closing" scam he submitted to state regulators. So far, the lender has not returned phone calls, according to Crabtree.

Compounding the problem beyond the individual foreclosures, the inflated selling prices of the homes involved remain "in the system" for use as "comparables" for valuations in the coming months. That $525,000 recorded closing price on the house that wasn't selling at $450,000, in other words, might now be available on the public records as a "comp" for overvaluing upcoming sales.

Posted in:General
Posted by Anthony Barrett on April 22nd, 2007 3:41 PMLeave a Comment

Subscribe to this blog