How Long Is an Appraisal Recertification of Value Good For?

Understanding Appraisal Recertification of Value

An appraisal recertification of value (ROV) serves as a targeted update to an existing appraisal report, rather than a completely new valuation. This process confirms the original valuation of a property remains relevant for a specific transaction or lending purpose, particularly when the initial appraisal is still somewhat recent. It is typically utilized when there have been no significant changes to the property or market conditions since the initial appraisal. The ROV provides a cost-effective method to extend the usability of a prior appraisal, avoiding the expense and time associated with a full, new report.

The recertification process is a limited scope review performed by the original appraiser who completed the initial valuation. This typically involves the appraiser re-inspecting the property, often from the exterior, to confirm its condition. The appraiser also reviews current market data to ensure the original opinion of value remains supported by prevailing conditions. This focused approach allows for a quicker turnaround than a comprehensive appraisal.

Common reasons for seeking an ROV include extending a loan commitment, facilitating mortgage refinancing where the original appraisal is slightly older but still applicable, or in specific real estate transactions that require a recent valuation without the need for an entirely new report. For instance, if an initial appraisal was “subject to completion” of certain repairs or construction, an ROV (often termed a completion report) confirms these conditions have been met.

Validity Periods for Recertification

The typical validity period for an appraisal recertification of value extends the original appraisal’s validity for a limited, additional timeframe. Generally, an ROV might extend an appraisal’s validity for an additional 30 to 60 days from its issuance date. This means that, depending on the specific lender or regulatory body, the overall appraisal (original plus recertification) is considered current for a total of 120 to 180 days from the original effective date.

Various factors influence these validity periods, with lender requirements playing a significant role. Specific lenders, such as banks and credit unions, often establish their own internal policies for appraisal and recertification validity. These policies can vary, necessitating direct communication with the lender to confirm their precise requirements.

The type of loan also impacts appraisal validity. Different loan types, such as conventional, FHA (Federal Housing Administration), and VA (Department of Veterans Affairs) loans, have distinct requirements for appraisal age and recertification. For instance, conventional loan appraisals are often valid for 120 days, while FHA appraisals can be valid for up to 180 days, with updates extending this further. VA loan appraisals are typically valid for up to six months.

Market conditions are another influencing factor. In volatile real estate markets, validity periods for appraisals and ROVs are shorter, sometimes as little as 30 to 60 days, due to an increased risk of value fluctuations. Conversely, in stable markets, lenders may accept an appraisal that is six months old.

Regulatory guidelines from agencies like Fannie Mae and Freddie Mac also influence appraisal validity and recertification practices for conforming loans. Fannie Mae, for example, allows appraisals to be used for up to 12 months from the note date, but requires an appraisal update if the original report is more than four months old. This update involves an exterior inspection and a review of current market data to confirm the property has not declined in value. If an appraisal is older than 12 months, a new appraisal is typically required.

Scenarios Requiring a New Appraisal

An appraisal recertification of value is not always a suitable option, and certain situations necessitate a completely new appraisal report. A new, comprehensive appraisal becomes necessary if too much time has passed since the original valuation, beyond the typical 4 to 6-month window that generally allows for recertification. If the original appraisal is, for example, 12 months or older, it is generally considered too aged for an ROV, even in stable market conditions.

Material property changes also trigger the need for a new appraisal. Any substantial alterations made to the property since the original appraisal, such as significant renovations, additions, major damage, or demolition, would impact its value and render the previous appraisal unreliable. These changes require a fresh, comprehensive assessment to determine the current market value accurately.

Volatile market conditions often preclude the use of an ROV. If the local real estate market has experienced rapid and significant shifts in property values since the initial appraisal, the original valuation may no longer be reliable, even with a limited review. In such dynamic environments, a new appraisal provides the most current and accurate reflection of the property’s value.

A change in transaction type or ownership structure can also necessitate a new appraisal. For example, switching from a conventional loan to an FHA or VA loan might trigger new appraisal requirements due to differing standards and criteria. Certain lender policies may also mandate a new appraisal under specific conditions, even if an ROV might otherwise seem appropriate.

Lastly, if the original appraiser is no longer available or unwilling to perform the recertification, a new appraisal becomes the only viable option. While some guidelines permit a substitute appraiser to complete an update, this often involves a thorough review of the original report and an independent opinion on its reasonableness, sometimes leading to a new appraisal.