It’s important for all parties involved in the real estate transaction to know how long appraisals are valid for. For buyers, sellers, and mortgage lenders, the appraised value is critical for both loan approval and a smooth closing. In this post, we’ll be looking closely at how long an appraised value is valid, as well as what happens when time runs out.
Introduction to Property Appraisals.
A home appraisal is one of the most important steps in all real estate transactions. Before funding any mortgage loan, lenders order an unbiased assessment of the property’s value. The appraisal is performed by a licensed appraiser, and the purpose is to make sure the home’s value is in line with the mortgage loan amount.
Factors Affecting Appraisal Validity
The value of a home on the real estate market is constantly in flux.
Appraisal reports are tied not only to the property value, but also to the market conditions of the time during which they’re written. This means that the older an appraisal gets, the more accuracy it loses.
In the Lone Star State, changing market conditions, fluctuating home prices, and movements in the values of comparable properties all impact how long an appraised value stays accurate.
The physical details also weigh on the property value. Real estate appraisals take into account the building’s square footage, age, condition, recent updates, and more. If you’re selling a home in a fast-moving market, a new appraisal will typically be needed earlier in the process than in stable areas.
Parties on both sides of the closing table should also remember that loan appraisals are different than real-time offers or cash offers. Even though the fair market shifts daily, the value of a home on paper reflects data the inspector assesses at the time of the inspection.
Loan Types and Appraisal Duration
The time it takes before a home appraisal expires depends heavily on the type of loan involved. Different lenders and loan programs will have unique rules and requirements, and staying informed can help cut the chance of delays. Also, since you will have to pay for your own appraisal, it’s helpful to know how long they’re valid, to avoid wasting money.
For conventional loans, backed by conventional lenders, most appraisals are valid for about 120 days. However, some may last longer if the local real estate market is stable. This follows guidelines established by Fannie Mae, or the Federal National Mortgage Association.
An FHA loan also requires an appraisal that’s valid for 120 days, but there are some extensions available if the loan process takes longer. USDA loans are used to help buyers in rural areas, and they allow the same timelines, with similar flexibility for slower market conditions.
VA loans protect active duty service members and veterans. A VA appraisal can stay valid for up to six months, or about 180 days, before needing a fresh appraisal. VA appraisals can also be used across multiple lenders with case number assignment.
Appraisal Updates and Recertification
Even when an appraisal report is still technically valid, a lender may ask for a recertification of value or a new appraisal. This usually happens if there has been a significant change to the property or the real estate market since the original inspection. For example, storm damage, major renovations, or big shifts in home prices can trigger an update.
A fresh appraisal may also be required in competitive markets where values change quickly. Lenders want to be certain that the appraised value reflects current conditions, for the current market, like Denton versus Houston, and using current information. This is also why every appraisal comes with an expiration date.
Sometimes, it’s enough to simply get the original appraisal report recertified. The lender might ask you to have the original appraiser just confirm that the property value hasn’t undergone any significant change.
That said, there are situations where an updated appraisal is needed. This will involve another visit by the appraiser and a new appraisal report.
Veterans Affairs and Appraisal
VA loans have their own unique rules around loan appraisals. An appraisal for Veterans Affairs will be valid for up to 6 months, so that active duty service members have a longer window than any other program.
One of the biggest protections of this system is the assignment of the case number. This one specific feature of VA appraisals is what allows them to follow the loan, instead of expiring if one transaction falls through.
In some cases, there may be two appraisals needed for a VA transaction. This happens when the buyer’s lender challenges or questions the first report. It may also happen if there are unusual property conditions that demand a second inspection.
Appraisal Extension and Implications
What happens when an appraisal expires before the loan closes? Most mortgage lenders will not move forward with an outdated report. At this point, there are usually three options: either request a short extension, order a recertification of value, or pay for a new appraisal.
Extensions aren’t guaranteed, and they depend on lender policy and market conditions. A fresh appraisal is the most reliable, but it always adds more time and cost to the process.
Home Value and Appraisal
A house appraisal gives lenders and buyers a number to work with, but that figure doesn’t always match what the market will pay. The appraised value is the professional estimate of worth at a specific time, while the market value reflects what buyers are actually willing to spend.
This gap can be frustrating during the selling process. A homeowner may believe their property is worth more, especially if nearby comparable sales show higher numbers. However, lenders rely on the appraisal to set loan limits.
It’s important for sellers to remember that an appraisal is only one part of determining property value. Factors like home prices in the neighborhood, upgrades, and current demand all shape the fair market outcome.
Long Appraisals and Their Impact
If you’ve already gotten an appraisal, be wary of relying on an old appraisal. The value changes in a shifting real estate market can cause problems. Also, if too much time passes, the report may no longer accurately reflect the current value of the home. This means lenders won’t accept it.
This is why appraisals carry an expiration date, and why a new appraisal might be required in a competitive market.
For sellers, outdated appraisals can lead to delays in closing. This can lead to needing extensions or having to provide additional documentation. Obtaining a valid appraisal is mandatory in most real estate transactions, but factors like rising or falling home prices can diminish its accuracy, fast.
Appraisal Process and Market Conditions
The appraisal process happens early in the closing process to confirm that the loan is backed by a reliable property value. In Texas, licensed appraisers follow strict guidelines to produce an unbiased report.
The appraiser inspects the home’s square footage, layout, and condition, then compares it to comparable properties. Market conditions play a big role as well. In a rising housing market, home values can shift quickly.
Appraisals also vary by property type. Existing homes in urban areas have plenty of comparable sales to guide pricing. In rural areas, however, limited data can make the process slower or less precise.
Federal Housing Administration FHA Guidelines
FHA loans generally come paired with their own appraisal rules. The typical FHA appraisal expires after 120 days, but lenders can extend that duration. Lenders will extend this timeline if the loan closes shortly after the expiry, or if the property hasn’t undergone any significant changes.
These appraisals have an expiration date to protect the buyer as well as the seller. Unlike a conventional lender, the FHA loan programs usually focus on making sure the home meets the minimum safety and livability requirements. As a result, the expiration date is tied, in no small way, to the property remaining in a similar condition as at the time of
Appraisal Time Frames and Loan Types
Different loan types in Texas set different rules for how long an appraisal remains valid:
- Conventional loans: Usually 120 days, though some lenders may extend based on stability in the real estate market.
- FHA loans: Generally, 120 days, with limited extension options.
- VA loans: Valid up to 180 days, with additional protections for veterans and active duty service members.
- USDA loans: Similar to FHA, typically 120 days, but may vary in rural areas where appraisals take longer to complete.
These timelines give buyers and sellers a clear idea of when a new appraisal might be necessary. For homeowners on a tight schedule, knowing these differences helps avoid delays. If you’re in a North Texas city like Saganaw, you can also sell your house fast to skip appraisal concerns altogether.
Conclusion and Next Steps
A house appraisal is more than just another box you need to check during a real estate transaction. It lays the foundation for what lenders are typically willing to approve, and it can heavily affect how smoothly the closing process goes as well. Since the average appraisal expires in just a few months, staying active in the process is important for buyers and sellers.
If you’re a Texas homeowner who is looking for a way to sell without the hassle of appraisals that most lenders require, a cash buyer may be ideal. A direct cash sale could be the best way to move on to your dream home without tons of stress.