In what is great news for every agent concerned about low appraisals – we have seen a significant increase in the number of Property Inspection Waivers (PIWs) and Property Data Collection reports (PDCs).
Property Inspection Waivers (PIWs)
A PIW is a designation given by Fannie Mae or Freddie Mac to a property when NO APPRAISAL OR VALUE ESTIMATE IS NEEDED. No PIW will be issued unless there is an appraisal of the property already in Fannie’s or Freddie’s database. There are other necessary criteria as well that I blogged about in 2019: Appraisal Waivers More Common Now. Suffice it to say that PIWs are “gifts” because they eliminate all value concerns – and we are seeing them more often than ever now.
Property Data Collection Reports (PDCs)
Property Data Collection reports are also known as Inspection-Based Waivers. These reports are also designations given by Fannie and Freddie in lieu of an appraisal or value estimate – and these too are gifts. PDCs are prepared by licensed inspectors – and they include photos, measurements, and other specifics about the property. But again – they require no value estimate.
Two Important Notes
- We are getting PIW and PDC designations even when we know an actual appraisal would come in low due to a lack of comparable sales data.
And - Agents should have us run DU (Fannie’s automated underwriter) with the address of the property their clients are offering on before they make an offer – to see if we get a PIW or a PDC. If so, they can waive the appraisal contingency with much more comfort.
Appraisal and Valuation Model Types
There are numerous appraisal and valuation model types and here are just a few: (1) Full Appraisal; (2) Inspection-Based Waiver/Property Data Collection; (3) Full Appraisal Waiver or Property Inspection Waiver (PIW); (4) Desktop Appraisal; (5) Hybrid Appraisal; (6) Repair/Update/1004D Inspection; (7) Exterior-only/Drive-by; (8) Field Reviews; (9) Collateral Desktop Analysis (CDA); (10) Automated Valuation Model (AVM).
I blogged about all of these in more detail here: Inspection-Based Appraisal Waivers – Fannie Mae’s Latest Attempt To Eliminate Appraisers. It is short and it has info that every agent should understand so, as always, I highly recommend skimming it at least.
I blogged again about appraisal types from another angle in August of last year as well, telling everyone to be leery of Hybrid appraisals: The Appraisal Type Everyone Should Avoid at All Costs! 5 Appraisal Types. This blog too is very worthy of a skim.
After I posted that blog though, a very prominent consultant who worked with Fannie Mae to set up Hybrids reached out to me to say that many firms are using Hybrids (a PDC combined with a desktop/remote appraisal) with enormous success. The issue seems to be a moot point now though in any case, as we have not seen a Hybrid designation for months. They may return though if rates drop significantly and we see another refi boom in the face of an appraiser shortage.
Many of these new designations or appraisal alternatives were set up to address the overall appraiser shortage that was rather acute during the go-go COVID era when rates were sub-4%. The average age of appraisers is about 85, give or take, and it takes years to train new appraisers – so Fannie and Freddie are both very concerned about this and will continue to look for data-based automation solutions.
