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What is the Lifespan of an Appraisal?

By Eleanor Boschert

Oh, the appraisal. How important it is to buying and selling a property. Conducted by a professional appraiser, it is a written estimate of a property's market value based in its condition and features and compared to recent similar sales in a nearby area. Typically completed early in the home buying process in order to provide a mortgage lender correct pricing information for loan purposes, it can make or break a real estate deal. But, buying a home is a lengthly process, so how long is an appraisal valid?

Depends on the lender. After the housing bubble burst and home prices plummeted, then fluctuated, most conventional loan lenders tightened the "term of validity" to range 60 to 90 days - at the very maximum, 180 days. For an FHA guaranteed loan, the term of validity is 120 days. More than ever, lenders now require the most accurate appraisal based on the most current market data built off comparable properties or "comps" in the area.

Yet, in a highly active market, good or bad, values can change quickly, making even a one or two-month-old appraisal obsolete. Furthermore, lenders want to see comparable sales that are no more than six months old to get the most current picture of the market near an appraised property. They are also looking for comps that are as closely similar to the appraised property with little adjustment for differences.

What happens when an appraisal expires?

Lenders may grant an extension of the term of validity if there is valid cause or the market allows for it. Maybe the market is picking up or slowing down. If so, then an expired appraisal can be recertified by having the appraiser re-assess the property, adjusting it for changing comp values in the nearby area. If there are no changes in comparable properties available at the time of recertification, then the appraiser will maintain the property's current appraisal value.

The FHA will allow a 30-day extension for an original appraisal to allow for the approval of the borrower and loan closing only if the borrower signs a valid sales contract or is approved prior to the appraisal expiration. It does not, however, allow for an appraisal to be re-used once a loan has closed.

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