How Long Are Home Appraisals Good For and Is Your Existing One Valid Anymore?

Unlike the carton of milk in your fridge, professional home appraisals aren’t stamped with a “best if used by” date—but that doesn’t mean they last indefinitely.

An appraisal is a snapshot of your home’s worth at a particular moment in time, and real estate markets do change (often for the better) based on the supply of homes, buyer demand, and general health of the economy.

“Appraisals don’t technically expire,” explains Robert McFadden, a Washington state-based real estate agent who’s sold over 69% more properties in Rochester, WA than the average agent. “However, it’s up to mortgage lenders as to how recent an appraisal needs to be in order to be accepted.”

So here’s the short answer to your question: “How long are home appraisals good for?”

• Typically you can expect a home appraisal to remain valid for anywhere between 60 days (two months) and 180 days (six months), with a number of exceptions and variables.
• Appraisers use comparable sales (recently sold properties with similar characteristics) to form their opinion of value. Comps older than six months may no longer be an accurate reflection of market value, so that’s why this time frame is generally considered to be an appraisal’s last legs.
• Appraisals will lose their relevance faster in volatile real estate markets, where prices skyrocket or drop suddenly.
• Different types of loans like Federal Housing Administration (FHA) and Veteran’s Administration (VA) loans have special rules and criteria for home appraisals, including how long they’re valid for.
• Use this good rule of thumb: As of 2019, most lenders will not accept an appraisal for the purpose of issuing a loan if it’s older than 90 days, according to McFadden.

Next we’ll review some of the finer details that impact a home appraisal’s shelf life and what that means for your home sale—the biggest of which is that no matter how long your existing appraisal is valid, your buyer will need to get a separate lender’s appraisal to obtain financing.

Exceptions to the standard appraisal expiration date

Appraisals may be good for longer or shorter periods of time than the standard window, depending on factors like the state of the real estate market and whether you’ve done any upgrades to the house lately.

In areas where the real estate market is red hot and home prices are rising fast, an appraisal’s valuation may only be relevant for a few weeks, rather than a few months.

If you were a seller in 2017, for example, you wouldn’t have wanted a dated appraisal in markets like Las Vegas and San Jose, which saw double-digit price appreciation of 11%-15% in the post-crisis real estate boom.

The same is true for swiftly chilling markets, where home prices are sinking fast.

Let’s use December 2008 as the most extreme example: The Case-Shiller Home Price index posted a record 18% drop, meaning that a home which appraised at $300,000 in 2007 would have been worth just $246,000 a year later. Home values change (though usually not that drastically)…and lenders need to know the current value at the time they’re issuing the loan, so that they aren’t lending more than a home is worth.

An appraisal can also become invalid if there are changes to your home’s condition. For example, if you’ve made repairs or upgrades to your home after obtaining an appraisal, that can alter its validity no matter how recent it is.

On the flip side, when market conditions are stable and home values are relatively unchanging, a lender may be more inclined to accept an older appraisal for the purposes of a home refinance or home equity line of credit.

Special loans: How long are FHA and VA appraisals good for?

It’s not always just the lender that determines how long an appraisal is good for—sometimes it’s the loan type that dictates the length of its validity.

On existing homes, FHA appraisals are valid for up to four months, while VA appraisals are valid for up to six months.

This doesn’t mean that the process or data used for these appraisals are different, but that the criteria required to obtain a specific valuation are different.

“Different loan types have different criteria that they look at during an appraisal,” explains McFadden.

“Conventional loans usually don’t have very many conditions, if any at all. However, if your buyer’s loan is an FHA or VA, they have requirements for the home’s condition that must be addressed before the loan can be approved.”

For example, let’s say that your property—in its current condition—appraises at $300,000 using standard appraisal requirements. However, your buyer is getting an FHA or VA loan, and their lender’s appraisal comes in at a lower value, say $290,000.

This is because it doesn’t meet requirements for a $300,000 valuation according to the loan type’s criteria. In order to get that $300,000 appraisal value for an FHA or VA loan, you’ll need to make repairs or upgrades in order to meet those stringent appraisal conditions.

How long are FNMA appraisals good for?

A Fannie Mae loan (aka the Federal National Mortgage Association or FNMA) is a conforming loan type that has specific regulations regarding the length of an appraisal’s validity.

Technically, an FNMA appraisal is valid for 12 months. However, this loan type requires an appraisal update at the four-month mark (or 120-days). This is true for FNMA appraisals on both existing homes and new construction.

How does an “appraisal update” work?

It’s not always necessary to pay for a brand new appraisal if your existing one has aged beyond 90 (or 120) days. In some cases, you may only need to get an appraisal update.

Typically, appraisal updates are ordered by lenders to ensure that the property value has not declined after the date of the original appraisal.

Since the appraisal update is considered a new assignment, expect to pay a small fee to obtain the update—although you’ll pay less for an update than you would for a new appraisal.

If extensive work is required to update the appraisal (such as the evaluation of new comps or changes in the real estate market), you probably need a reappraisal rather than an update.

However, don’t confuse an appraisal update or reappraisal with the recertification of value process—which you typically won’t need to pay for.

Also known as completion certification, this process is required to certify the original appraisal’s valuation. The recertification is done specifically to ensure that conditions set during the appraisal—such as required repairs or updates to the property—are complete, and the appraised valuation is now valid.

Put simply, a recertification of value simply confirms if the validity of the original appraised valuation. An update or reappraisal provides a new valuation (or checks current conditions to determine if the valuation has remained the same).

If I order an appraisal on my home, is that enough to satisfy my buyer’s lender?

There are a lot of reasons why a homeowner might obtain an appraisal—and having one can be helpful when you list the house for sale.

However, you should never get one expecting that your buyer’s lender will use it to approve the loan.

“An appraisal can be used as the basis for your listing price and the price that you’re willing to accept for the house,” says McFadden.

“Advertising the property as recently appraised for X number of dollars is certainly a good marketing vehicle to help buyers understand the true value of the property and feel comfortable when making an offer. However, the buyer’s lender will probably require their own appraisal to verify yours.”

Different loan types have different criteria to determine valuation and lenders have their own guidelines to determine the length of an appraisal’s validity.

So regardless of whether you choose to get a pre-listing appraisal, know that your buyer will have to obtain a separate one through their lender.

How is an appraisal different from a comparative market analysis?

On the surface, an appraisal looks pretty similar to the comparative market analysis (CMA) that real estate agents put together to help their sellers set an appropriate list price.

While CMAs and appraisals look at the same data, they each serve a different purpose.

An agent-provided CMA is focused on the best interest of the home seller. It’s primary purpose is to determine how much money they can get for the house.

A buyer-obtained appraisal is focused on the best interest of the buyer and their lender. It’s primary purpose is to determine the fair market value so that the buyer doesn’t overpay, and the mortgage company doesn’t lend more than the home is currently worth.

An appraisal also has to be performed by a licensed or certified professional home appraiser who documents their findings in the Uniform Residential Appraisal Report for single-family dwellings to come up with an opinion of value.

However, comparable sales drawn up by your agent may be used to validate an appraisal’s valuation.

“I frequently have lending institutions contact me to do a comparative market analysis when there’s a dispute over an appraisal,” explains McFadden. “The CMA could validate the actual appraised value, or it could find additional comps that perhaps the appraiser missed.”

If it happens that your buyer’s appraisal comes in lower than the sale’s price, the CMA you obtained from your agent could help your home sale.

Let’s say your agent’s CMA includes comps the lender’s appraiser missed. That may be enough to persuade the buyer’s mortgage company to lend the agreed-upon amount.

That’s why it’s so important that you hire an experienced agent with a proven track record when you’re selling your house.

“Inexperienced agents just grab a bunch of comparable properties to create a value estimate rather than looking into the specifics,” explains McFadden.

“Experienced agents make adjustments based on square footage, upgrades, the number of bedrooms, the location, and other features to determine the home value.”

An appraisal’s true value

Between roller-coastering home values, changing real estate market conditions, varying criteria among loan types, and the short duration of an appraisal’s validity—obtaining one isn’t always worth the money for homeowners.

However, if you time it right, an appraisal can help you find ways to improve your home’s value—and it may even help your home sell when you’re ready to list it.

Header Image Source: (Pxhere)