What it means to waive an appraisal
The home buying process can be exciting, but also complex. One key step involves securing financing for your dream house. During the loan application process, an appraisal is typically conducted. This impartial assessment, performed by a licensed professional, determines the fair market value of the property. But what if there was a way to bypass this step altogether? This blog post will explore the concept of waiving an appraisal, including its potential benefits, drawbacks, and whether it might be the right decision for you, especially if you're considering buying a house in New Jersey. We'll also highlight the importance of consulting with a qualified New Jersey real estate agent throughout the process.
What is an Appraisal?
In the traditional home buying process, an appraisal involves a licensed professional visiting the property to assess its value. This helps ensure the lender isn't financing more than the house is actually worth.
What Does Waiving an Appraisal Mean?
Waiving an appraisal signifies you're agreeing to proceed with the purchase without the appraisal step. The lender will rely on other methods, like a Comparative Market Analysis (CMA), to determine the property's value. A CMA compares recent sales of similar homes in the area to estimate the current market value of the house you're interested in.
Benefits of Waiving an Appraisal
There are a few reasons why waiving an appraisal might be appealing:
Faster Closing: The appraisal process can add time to closing. Bypassing it can potentially expedite the process, especially if you're in a competitive market.
Cost Savings: Appraisals typically cost a few hundred dollars. Waiving it saves you that expense.
Drawbacks to Consider
While waiving an appraisal offers some advantages, there are also potential downsides:
Overpaying Risk: The biggest concern is the possibility of overpaying for the house. Without a professional appraisal, you might be relying on an inflated value.
Limited Loan Options: Not all lenders offer appraisal waivers. This option is typically available for conventional loans with a substantial down payment (usually 20% or more).
Should You Waive an Appraisal?
The decision depends on your specific situation. Here are some factors to weigh:
Market Conditions: In a hot market, waiving an appraisal might make your offer more attractive to sellers.
Down Payment Size: A larger down payment reduces the lender's risk, making them more likely to consider a waiver.
Comfort Level: Are you confident in the home's value based on your research?
Consulting a New Jersey Real Estate Agent
For a nuanced perspective on the New Jersey real estate market, consider talking to a qualified New Jersey real estate agent. They can provide insights on current market trends, comparable properties, and the potential risks and rewards of waiving an appraisal in your specific scenario.
Resources:
What Is An Appraisal Waiver And How Do You Get One? by Quicken Loans offers a buyer-centric overview of appraisal waivers.
Appraisal Waivers: Everything You Need To Know from Orchard clarifies the concept of waiving an appraisal contingency.
What Is An Appraisal Waiver In Real Estate? by Bankrate presents a balanced view of the pros and cons of appraisal waivers.
