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What is an appraisal waiver?

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Written by Josh Richner
Edited by Cassidy McCants
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Between touring homes, negotiating with sellers and applying for a mortgage, you have a lot to think about when buying a home. In some cases, you may be able to streamline the process by skipping the appraisal with an appraisal waiver.

An appraisal waiver is an agreement between you and your lender that allows a real estate transaction to go forward without an official appraisal.

How does an appraisal waiver work?

An appraisal waiver lets you skip the appraisal in the homebuying process. This means that there is no in-person appraisal. Instead, the lender uses data during its underwriting process to determine the home’s value.

If you are interested in an appraisal waiver, ask your lender about options.

Appraisal waivers have become an increasingly common way to save time and money while reducing stress in the homebuying process. The COVID-19 pandemic has brought on a willingness from lenders to consider appraisal waivers due to social distancing efforts and booming housing values.

To find out if you are eligible for an appraisal waiver, you will need to ask your lender. A waiver is only possible if the lender has a way to qualify you by other means.

They may consider recent comparable sales and photos of the home (sent by an inspector or the buyer) — whatever it takes to obtain enough information about the property through other methods.

What are the benefits of an appraisal waiver?

One of our reviewers in Tennessee wrote that an appraisal waiver “was one of the best things” that happened for them during their refinancing process. There are a few benefits to getting an appraisal waiver:

  • Saves time: From scheduling to completion, an appraisal can take anywhere from a few days to a few weeks. Issues with inspections and appraisals can further delay the purchase, so bypassing this step can shave precious time during the homebuying process.
  • Saves money: Appraisals generally cost from $200 to $600, and the borrower usually pays. With an appraisal waiver, you'll avoid this fee.
  • Less stress: The entire homebuying process can be stressful, but hinging the deal on an appraisal can be especially nerve-wracking. If a lender is willing to bypass the appraisal, it’s one less thing to worry about.
  • Less contact: As many people continue to limit their exposure to others, avoiding an in-person meeting may be a relief for some borrowers.

Things to consider

While the primary aim of an appraisal is to help a lender lower its financial risk, an appraisal is also of benefit to the borrower. Waiving the in-person appraisal means the borrower won’t know the most accurate value of the home they're purchasing. This could lead to overpaying for the home.

An appraisal can also provide an opportunity for further negotiation. If your appraisal comes back lower than the agreed-upon sale amount, you can go back to the seller to request a lower price. It can also give you the opportunity to exit the transaction entirely if the value’s not what you expected.

How to get an appraisal waiver

Today, many lenders embrace technology and automated processes wherever and whenever they can. If your lender uses an automatic underwriting process, it may offer an appraisal waiver upfront, especially if there have been recent appraisals completed at the property and recent comparable home sales.

If you're interested in getting an appraisal waiver for your next home purchase or refinance, speak with your lender if it doesn’t offer one automatically. Lenders can tell you if you’re eligible and walk you through the process. Many are happy to work with borrowers to get them through the homebuying process as quickly and stress-free as possible.

Just make sure you’re on the same page as your lender regarding the waiver; a few of the reviewers on our site have mentioned poor communication in this area, with promises of waivers ultimately unfulfilled.

FAQ

What hurts a home appraisal?

There are a few things that can hurt a home appraisal:

  1. Poor condition: If the house is in disrepair, it will likely appraise for less than a comparable home in good condition. This is because the lender will factor in the cost of repairs when considering the loan amount. Note that cleanliness and clutter are not likely to affect the value of a home.
  2. Lack of recent sales in the area: An appraiser will look at comparable homes in your neighborhood to get an idea of what similar houses are selling for. If there haven’t been many sales in the area recently, getting an accurate appraisal will be more difficult.
  3. Unusual features: If the home has features that aren’t common in the area, it can be challenging to find comparable homes for an accurate appraisal. Having the only house in the area with an in-ground pool may be a selling feature, but it can be hard for an appraiser to determine how much impact that has on the home's overall value.
When does the buyer get an appraisal report?

The buyer usually receives a copy of the appraisal report shortly after the lender receives it, about a week or two after the appraisal is completed. An appraisal report describes the home's condition, gives a detailed market analysis and states the appraised value.

How often do buyers back out after inspection?

Every situation is different, but it’s not uncommon for buyers to back out after inspection if they find serious problems with the home. Often, buyers will ask a seller to make repairs before moving forward with the purchase, and if the seller is unwilling or unable to make them, the buyer may choose to back out.

Bottom line: Should you ask for an appraisal waiver?

Appraisal waivers can save you time and money, but it's important to weigh the pros and cons before deciding if it's right for you. An appraisal can provide valuable information about the home you want to buy, so you'll want to be sure you’re comfortable waiving it. If you have any questions, be sure to speak with your lender. It can help you determine if an appraisal waiver is right for you.

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