How Long Does a Conventional Appraisal Stay With the Property?

A conventional appraisal assesses a property’s market value. Mortgage lenders use this valuation to ensure the loan amount does not exceed the property’s worth. While an appraisal produces a physical report, its value conclusions have a defined period of relevance for financial transactions, rather than permanently attaching to the property.

The Lifespan of a Conventional Appraisal

While a physical appraisal report exists indefinitely, its valuation conclusion possesses a limited lifespan for lending purposes. For conventional loans, an appraisal is valid for 90 to 120 days from its effective date. This limited duration exists because real estate markets are dynamic, with property values subject to constant change based on various economic and local factors. Lenders require current valuations to mitigate risk and ensure the property’s value adequately supports the loan amount at the time of closing. For newly constructed homes, conventional loan appraisals may sometimes remain valid for up to a year, though they still require an update after 120 days.

Factors Affecting Appraisal Validity

Several factors can influence whether an appraisal remains valid or usable, even within or just beyond its initial validity period. Rapidly changing market conditions, such as significant price increases or decreases and shifts in housing inventory, can quickly make an older appraisal’s value obsolete. For instance, in a fast-moving market, an appraisal might need to be updated sooner than the 90-day window.

Changes to the property itself can also affect an appraisal’s continued validity. Major improvements, such as additions or significant renovations, or conversely, substantial damage or deferred maintenance, can alter the property’s condition and value assessed in the original report. Unpermitted work or incorrect measurements noted in an appraisal can also impact its accuracy and usability.

Individual lenders may also have specific requirements that can affect an appraisal’s usability regarding the age of an appraisal or the conditions under which it can be reused. Appraisers operate under professional obligations to provide objective, current valuations. This independence ensures the valuation reflects the market at a specific point in time.

Appraisal Updates and New Appraisals

When a conventional appraisal’s validity period nears its end or expires, or if market or property conditions have changed, lenders have options to ensure a current valuation. An appraisal update, often performed using Form 1004D, allows the original appraiser to review recent market data and the property’s exterior to confirm if the value has declined since the original report. This process helps determine if the original value is still accurate or if minor adjustments are needed based on current market trends.

An appraisal update is distinct from a recertification of value; a recertification confirms that specific conditions from the original appraisal, such as the completion of repairs, have been met, but it does not bring forward the effective date of the valuation. For an appraisal update to be accepted for a conventional loan, it must be completed by the original appraiser within a specific timeframe after the initial report, provided no major market shifts or property changes have occurred. If the appraiser indicates a decline in value during the update, a new appraisal is required.

If the original appraisal’s validity period has fully expired, if significant market or property changes have taken place, or if an update is not feasible, a completely new appraisal will be necessary for the transaction. This involves a full re-inspection of the property and a comprehensive new report, providing an entirely fresh valuation. The ultimate goal of these processes is to provide the lender with a current and reliable valuation to support their underwriting decision for the loan.