Appraisal Institute Annual Summit 2027

An appraisal waiver (formally called a Property Inspection Waiver or PIW for Fannie Mae, ACE for Freddie Mac) allows lenders to skip the traditional appraisal and use an automated valuation model (AVM) instead. Waivers are offered when Fannie/Freddie have high confidence in the automated value based on data richness for the property. As of 2025, waivers are offered on roughly 40–50% of eligible refinances and a smaller percentage of purchases. Waivers save buyers $500–$800 in appraisal fees and can accelerate closing by 1–2 weeks. The risk: if the AVM value is wrong, the borrower may be over- or under-leveraged without knowing it. For high-stakes purchases, a buyer can always request a traditional appraisal.

Appraisal bias refers to systematic undervaluation of properties in minority-majority neighborhoods, resulting in lower loan amounts, reduced wealth accumulation, and reinforcement of racial wealth gaps. Research by Brookings Institution found homes in Black-majority neighborhoods are valued 23% lower on average than comparable homes in white-majority neighborhoods. The FHFA, HUD, and DOJ have formed the Interagency Task Force on Property Appraisal and Valuation Equity (PAVE) to address the issue through appraiser training standards, AVM model auditing, and reconsideration-of-value policies.

A traditional appraisal involves a licensed appraiser physically visiting the property, selecting comparable sales ("comps"), and applying adjustments based on condition, features, and market context. An AVM uses statistical models applied to data: MLS records, tax assessments, public records, and recent sales. AVMs are fast (instant) and inexpensive but have weaknesses: they perform poorly for unique properties, rural areas with limited comps, markets with rapid price changes, and properties with significant renovation. The Appraisal Institute advocates for hybrid approaches that combine AVM efficiency with appraiser judgment.

An appraisal contingency in a purchase contract allows you to back out of the deal (and recover your earnest money deposit) if the property appraises below the purchase price. Without this contingency — common in competitive markets where buyers waive it to win offers — you are obligated to close even if the appraisal comes in low. If you waive the contingency and the appraisal comes in $20,000 below purchase price, you must either bring $20,000 extra cash to closing (the lender will only lend against appraised value) or negotiate with the seller to reduce the price. Waiving an appraisal contingency is a risk; understand the downside before agreeing to it.

A reconsideration of value (ROV) is a formal request to the appraiser to review their valuation based on additional comparable sales or factual errors in the appraisal report. Under FHFA guidelines updated in 2024, lenders must have formal ROV processes — and borrowers now have the right to submit comps directly to the lender (not the appraiser) who must forward them. To request an ROV: ask your lender for the ROV form, provide 3–5 closed comparable sales that the appraiser did not use, and explain why they are more representative than the comps used. ROV success rates are highest when the buyer provides comps in the same neighborhood, same size range, and sold within 90 days.