How Long Is a Property Appraisal Good For?

A property appraisal provides an unbiased estimate of a property’s value at a specific point in time. This valuation is a formal, professional opinion conducted by a licensed appraiser. Appraisals are commonly required for various financial purposes, such as real estate transactions, securing mortgage loans, and assessing property taxes. Understanding how long an appraisal remains relevant and usable for its intended purpose is important for anyone involved in property dealings.

Standard Validity Period

A property appraisal reflects value as of a specific date, but its practical validity for lending purposes extends for a specific timeframe. For conventional loans, an appraisal is valid for 90 to 120 days, with some accepted for up to six months. This standard period is influenced by the guidelines set by major entities in the mortgage industry. Fannie Mae considers an appraisal valid for 12 months, but requires an update after four months.

Freddie Mac considers appraisals valid for up to a year, with a similar update requirement after 120 days. Government-backed loans, such as those from the Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA), have their own validity periods. FHA appraisals are valid for 180 days, which can be extended with an update. VA appraisals require a new assessment if the sale does not close within six months. These periods aim to balance the need for current market information with the time required to complete a transaction.

Factors Influencing Validity

Several elements can cause an appraisal to lose validity, even before its standard expiration period. Rapid shifts in local real estate values, whether increasing or decreasing, can quickly make a previous valuation unreliable. This market volatility means an appraisal performed during a stable period is valid for longer than one conducted during a rapidly changing market.

Significant changes to the property’s condition also affect its appraised value. This includes major renovations, additions, substantial damage, or a lack of maintenance. If a property undergoes extensive improvements after an appraisal, the original valuation may no longer accurately reflect its enhanced value. Conversely, natural disasters or severe deterioration can also invalidate an appraisal.

The specific type of transaction can also influence how long an appraisal is considered current. Requirements for a property purchase may differ from those for a refinance. Various loan programs, like FHA or VA loans, have stricter rules or shorter acceptable validity periods in certain circumstances. Individual lenders may implement their own policies, known as “lender-specific overlays,” which can be more conservative than standard industry guidelines. An appraisal’s original intended use, such as for a purchase versus for estate planning or property tax appeals, also dictates its effective lifespan.

When a New Appraisal is Required

A new appraisal report becomes necessary in specific situations, regardless of any prior valuations. This is required when the time elapsed far exceeds the generally accepted standard validity period, such as more than six months or a year since the initial appraisal. Lenders will not accept an appraisal that is significantly outdated due to the dynamic nature of real estate markets.

A new appraisal is also mandated if substantial changes have occurred in the housing market since the original valuation was performed. This ensures the lender has a current and reliable estimate of the property’s value. If the property itself has undergone major alterations, such as significant additions, demolitions, or extensive renovations that fundamentally change its size, condition, or utility, a fresh appraisal is essential.

A change in the loan program or lender can also necessitate a new appraisal. Different loan products or lenders have distinct requirements, even if a previous appraisal is technically within a standard validity window for a different purpose. If there are significant concerns about the accuracy, completeness, or any material discrepancies in the original appraisal, a new, comprehensive valuation will be required to ensure accuracy and compliance.

Appraisal Updates and Re-certifications

In certain circumstances, a new appraisal may not be necessary, and a less extensive process can be used to extend or re-affirm the value of an existing appraisal. An appraisal update involves the appraiser revisiting the property and reviewing current market data to confirm if the original value remains accurate or has changed. This option is used when an appraisal is slightly past its initial validity period (between four and twelve months old) and market conditions have remained relatively stable. The results of such an update are reported on a specific form, such as Fannie Mae Form 1004D.

A Recertification of Value (RCV) is another alternative, where the original appraiser confirms that the property’s value remains the same or has changed by a specific amount. An RCV is used when the original appraisal is very recent, but minor conditions, such as the completion of repairs or construction, need to be confirmed. Unlike an appraisal update, an RCV does not involve bringing forward the effective date of the appraisal but rather confirms that conditions of the prior assignment have been met. These updates and re-certifications are permitted under conditions of stable markets and require approval from the lender, performed by the original appraiser.