How long are appraisals good for? A concise guide

Home appraisals are a critical part of the homebuying process to reassure lenders that the collateral covers the loan amount and give buyers confidence that they’re getting a fair deal.

But appraisals don’t last forever. This article explores how long appraisals are good for, how factors like market conditions affect their validity, and what to do if your home appraisal expires prematurely.

What are home appraisals for?

The vast majority of mortgage lenders require appraisals to make sure the home is worth the loan amount so they’ll be protected if the borrower defaults. For buyers, appraisals show that the home’s market value is roughly in line with what they’ll be paying. 

While it’s not the focus (that’s what inspections are for), appraisals can also surface previously unknown issues like necessary repairs or safety concerns.

Appraisers value properties by comparing them to recent sales (“comps”) in the area, factoring in the home’s condition, size, location, and any unique features that make it stand out. Like home inspectors, they walk through the property to document its condition and characteristics, but they don’t look for code violations or make detailed lists of repairs. Appraisal times vary, but 30 minutes to two hours is a good rule of thumb.

How long are house appraisals good for?

Exactly how long a conventional appraisal is good for varies widely depending on the lender, loan type, and market conditions. Many lenders will accept a home appraisal report created within the last 120 days, but some allow as many as 180 days. Conforming loans and certain types of government-backed loans allow extensions to increase the validity period to a full year.

Appraisal validity periods by loan type

The type of loan has the most concrete impact on the validity of a home appraisal. Here’s a breakdown:

Conventional loans

Conventional loans are the most common type of mortgage. They’re issued by private lenders and aren’t backed by the government, which means they don’t come with a universal appraisal due date.

However, most conventional loans conform to mortgage standards laid out by Fannie Mae or Freddie Mac, government-sponsored enterprises that regulate and support the mortgage market. Both Freddie Mac’s and Fannie Mae’s appraisal expiration date is 12 months, with an appraisal update required after the first 120 days.

Federal Housing Administration (FHA) loans

The FHA appraisal expiration date was also 120 days until 2022, when it was extended to 180 days. You can get one update to extend the validity period up to a year.

Veterans Affairs (VA) loans

VA appraisal expiration is straightforward: The appraisal is valid for 180 days and cannot be extended.

United States Department of Agriculture (USDA) loans

Home appraisal reports for USDA loans also expire after 180 days, but they can be updated once for a maximum validity period of one year.

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What factors influence the validity of a real estate appraisal?

Apart from the type of loan, there are two main factors that go into how quickly a home appraisal report becomes outdated: market conditions and changes in the state of the property.

Under volatile market conditions, property values and comparable sales are constantly changing. Whether the market is crashing or booming, lenders want the most up-to-date appraised value, and the typical 90 days might not cut it. In very hot (or rapidly cooling) markets, lenders might want to see appraisal reports no older than 60 or even 30 days.

But how do stable local market conditions affect appraisal validity? In this case, the situation is reversed. Appraisal validity timelines tend to loosen, since a few extra weeks or even months are much less likely to result in drastically different valuations.

Lenders will also send out an appraiser if property conditions have changed substantially. This could be a potentially positive change, like a renovation or addition, or a negative one, like damage from a fire or a flood.

What to do if your appraisal expires

If your initial appraisal expires before you have a chance to close, don’t panic. Depending on your loan type and timeline, you have two possible ways forward:

1. Extend

If market and property conditions haven’t changed significantly, request an extension. Your lender isn’t obligated to accept it, but there’s no harm in asking. Remember: They’re just as motivated to close the deal as you, and avoiding a new appraisal saves them time and money. A large down payment might improve your chances, since it reduces risk for the lender.

2. Update

If you can’t get an extension on your original appraisal, you’ll have to get an appraisal update. The appraiser will review market conditions and any changes to the property to determine whether the home has decreased in value. If it hasn’t, the appraisal is essentially renewed, extending its validity.

A related term you might see pop up in discussions about home appraisals is “recertification of value.” While it might sound like the same thing as an appraisal update, this is a common misconception. A recertification of value doesn’t extend the expiration date of an appraisal or reassess a home’s market value. Instead, it confirms that any conditional items laid out in the original appraisal have been met and the original projected value is valid.

For example, if a home appraisal report values a home at $500,000 “subject to the installation of a new roof,” a recertification of value would confirm the roof was installed and that the $500,000 valuation still stands.

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FAQs

What’s the difference between a home appraisal and a home inspection?

While they have some similarities, home appraisals are for assessing the market value of a property, while home inspections focus on evaluating the property’s condition and safety. While most lenders require an appraisal, inspections are optional, though experts encourage buyers to get them done to identify any serious issues early.

Inspections are also much more thorough than appraisals. Appraisals provide a broad idea of the property’s market value and condition, taking as little as 30 minutes to complete. Inspections last at least two hours and often result in dozens of pages of notes.

Who pays for a home appraisal?

In most cases, the buyer is responsible for paying the appraiser, even though it’s the lender who hires them. Occasionally, motivated sellers will cover the appraisal fee to incentivize a speedy sale. The fee for a home appraisal depends on the property’s location, square footage, and condition, but it typically falls in the $300–450 range.

Lenders usually want you to pay for the appraisal upfront, but some will let you roll the fee into closing costs. Appraisal fees aren’t usually refundable if a deal falls through.

What happens if the appraisal is lower than expected?

If an appraisal comes back unexpectedly low, buyers have a few options:

— Renegotiate: Try asking the seller to drop the price to meet the appraised value. Your chances are good if the discrepancy is small. If you’re very motivated or this approach falls through, you can also ask to split the difference and meet in the middle.

— Put more money down: Bring extra cash to closing to cover the shortfall.

— Challenge the appraisal: Dispute the appraisal if you think the appraiser made mistakes or used inadequate comps.

— Move on: If your contract has an appraisal contingency, you can simply cancel the deal and walk away without financial penalty.