How Long Does a Real Estate Appraisal Last?

A real estate appraisal provides an objective estimate of a property’s market value at a specific point in time. This valuation is conducted by a licensed appraiser and is often a requirement in various real estate transactions, such as purchases, sales, or mortgage financing. Appraisals help ensure fairness and financial security by providing an unbiased opinion of worth. Because market conditions and property characteristics can change, the value estimate provided by an appraisal is inherently time-sensitive.

Standard Appraisal Validity Periods

For most mortgage lending purposes, a real estate appraisal remains valid for 90 to 120 days. This timeframe is influenced by guidelines from major lending institutions like Fannie Mae and Freddie Mac. They mandate these periods to ensure the appraisal reflects current market conditions for the loan’s collateral and to mitigate risk, as property values can fluctuate.

The necessity for a time limit stems from the dynamic nature of real estate markets. Property values can be affected by economic shifts, local supply and demand, and interest rate changes, making an older appraisal potentially inaccurate for current transaction needs. While transactional appraisals have formal expiration dates, valuations for other uses, like estate planning or tax assessments, may have a less rigid “shelf life.” For these non-lending scenarios, the appraisal’s relevance diminishes over time as market data and property conditions evolve.

Factors Influencing Appraisal Duration

Several factors influence how long an appraisal remains relevant, even if a formal validity period is not explicitly stated. Rapidly changing market conditions, with significant price increases or decreases, can quickly shorten an appraisal’s effective life. In a volatile market, a value determined just a few months prior might no longer accurately reflect the property’s current worth. Conversely, a stable market with consistent property values and predictable trends might allow an appraisal to remain reliable for a longer duration.

Changes to the property’s condition also play a significant role in an appraisal’s relevance. Major renovations, additions, or significant damage can alter a property’s value substantially, rendering a previous appraisal obsolete. For example, completing a major home improvement project after an appraisal would necessitate a re-evaluation to capture the new value. The requirements of the lender or underwriter for a particular loan program can also dictate whether an existing appraisal is acceptable. Lenders have their own risk parameters, which can override the general validity period, especially if loan terms change or if a different lending institution is involved.

When an Appraisal Needs Updating

An existing appraisal may require an update or a new valuation under various circumstances. The most common trigger is the expiration of the initial validity period, typically 90 to 120 days, requiring a new valuation or an update for lending purposes. Beyond this formal expiration, significant shifts in market conditions can also necessitate a new appraisal. If property values in the area have seen substantial appreciation or depreciation since the original valuation date, the previous appraisal may not accurately reflect the current market.

Material changes to the property, such as major repairs, extensive renovations, or significant damage, will also render an existing appraisal outdated. These physical alterations directly impact the property’s value and require a new assessment. Changes in loan terms or a switch to a different lender can also prompt the need for a new appraisal, as each financial institution may have specific requirements for loan collateral. Finally, if a real estate transaction experiences unexpected delays that push the closing date beyond the appraisal’s acceptable timeframe, an update or a new appraisal becomes necessary.

Appraisal Updates and New Appraisals

When an appraisal’s validity is in question, two options are available: an appraisal update, often called a “recertification of value,” or a new appraisal. An appraisal update is a limited scope of work, typically performed by the original appraiser. It involves reviewing market data and confirming the property’s condition has not significantly changed, allowing the appraiser to re-certify the original value or make minor adjustments. This option is permissible within a certain timeframe, such as six months to a year from the original appraisal date, and only if no substantial changes have occurred to the property or market.

Conversely, a new appraisal is required when the original appraisal is too old, generally exceeding the 120-day mark, or when significant changes have occurred to the property’s physical characteristics or broader market conditions. A new appraisal involves a complete re-evaluation of the property, including a new inspection and a comprehensive analysis of current comparable sales. This is also necessary if a different appraiser is involved or if the valuation’s scope of work has changed significantly. While an appraisal update is usually less expensive and quicker to obtain, a new appraisal provides a more thorough and current assessment of value. The decision between the two often rests with the lender and the specifics of the transaction.