"For only $599, we will grant you an appraisal waiver to help you avoid having an appraisal that 'comes in short." **
I just saw yet another ad promoting this option. Sounds great, doesn't it? At first read, it sounds pretty promising. But, what does it really mean for you, as a home buyer?
The long and short of it is a bit of a gamble, in my opinion. An appraisal waiver removes your choice and right to have a proper appraisal completed by a professional appraiser, to protect your investment. To verify that the sales price is supported by the market. Do you really want to take a gamble with the single, largest investment you may ever make for you and your family?
It also means that you will be charged $599 for a waiver, which is more than the cost of an actual appraisal in most situations. (or charged whatever waiver fee your particular lender offers as a fee) You may pay the same or more than the cost of an appraisal, just to to give up your rights to have an appraisal. You pay to lose the security of having a sound mind that you are making a good investment, and not overpaying for your new home.
As I promote, always, the appraiser is not your enemy. We are your only objective line of defense in making sure you are not grossly overpaying for your new home. If you, a friend or family member involved in a purchase are offered a waiver, I highly recommend weighing the options and choosing an appraisal over a waiver option. Don't trade your peace of mind for fast food, drive-thru service.
(** 'Comes in short' is a common phrase in today's market. What it actually means is that the house you want to purchase is 'overpriced', or that the market does not show data and analysis to support the sales price)
Appraisal Waiver; Correct me if I'm wrong, but didn't the industry try this back in the 80's? Yes, I'm certain I read that somewhere! I believe it turned into the S&L crisis!! Loans without appraisals. In fact the government enacted F.I.R.R.E.A aka- The Financial Institutions Reform, Recovery, and Enforcement Act of 1989, it's a United States federal law enacted in the wake of the savings and loan crisis of the 1980s. What the hell is wrong with banks? didn't they learn anything from the 80's? Next they will suggest we need another 911, or Pearl Harbor because they have forgotten what it's like, or people haven't suffered enough. I've been appraising 20 years, If I live to a thousand…