The Appraisal Waiver: What Home Buyers Should Know

Jul 30, 2024

6-minute read

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A home appraisal, sometimes known as a valuation, is an important step in the home buying process. It’s a way to make sure you’re not paying more for a home than it’s worth.

The downside of an appraisal is that in-person appraisal options aren’t cheap and home buyers bear the responsibility of paying for one. An in-person appraisal can also slow down a home sale, especially if an appraiser determines that a home is worth less than the amount a buyer has agreed to pay for it.

For these reasons, some buyers ask for an appraisal waiver, which would allow them to purchase a home without a formal appraisal. But, even with the cost savings, is an appraisal waiver a smart move? It depends on a few factors, including how concerned you are about potentially overpaying for your new home.

What Is An Appraisal Waiver?

An appraisal waiver shortens the appraisal process because buyers who qualify for a waiver can skip the in-person visit by a licensed appraiser. Instead, the lender will use data provided by an automated underwriting system to determine the value of the home being sold. This information will include prices from recent nearby home sales and any past sales data from the home the buyer is purchasing.

A waiver can save home buyers both the cost of paying for an appraisal and the time involved in scheduling an in-person assessment.

The challenge here is that not all borrowers and homes will qualify for an appraisal waiver, and lenders are under no obligation to grant a borrower one. For example, a lender can deny a request for an appraisal waiver if they have any reason to believe an in-person appraisal is needed. This gives lenders a lot of discretion in determining who qualifies for an appraisal waiver.

See What You Qualify For