How soon can a new appraisal be used?

Question

How soon can I use the appraised value of a property that was purchased for cash instead of the purchase price?  I've been told that I can use the appraised value after 12 months of ownership.  Otherwise, any loan I'll apply for will use the purchase price as the value.  I can't find anything online that will give me a concrete answer.

Brian Garrett · Answer

Yes they will use the new appraised value or ARV now that it has been more than 6 months.

Josane Cumandala · Answer

Residential real estate appraiser here. I'm sure I'm understanding the question correctly so let me know if I misunderstood you.

An appraisal has an effective date, usually the date of inspection, and it is valid for that effective date only.  That is because markets are changing all the time. It is not appropriate to use an appraisal from twelve months ago as your sole basis for today's market value. That value could go up or down depending on the specific factors of your market.

If you apply for a refinance or other loan using your property for collateral, the bank will most likely order a new appraisal and base the loan on the current appraised value. If you're wondering how long it will take for the property to appreciate in value in order to give you  some equity to take out....it depends. I wouldn't say 12 months is a hard and fast rule. Can't paint in such broad strokes, it all comes down to your market.

Christine Raczkiewycz · Answer

Thank you very much for replying.  This is a sticky situation.  My question is not how long an appraisal is valid.  My question is based on what a property's value is based on immediately after it is purchased.  Here is my hypothetical situation.  I purchased a 4-flat with cash (foreclosure/short sale/auction/etc.)  8 months have gone by and in that time frame I've rehabbed the building with my own funds.  I approach my lender for a loan.  Does my lender use a new appraised value for the value, or still the purchase price because it has been less than 12 months of my ownership of the property?

Brad Miller · Answer

I sold a property last December and the buyer was going FHA.  Sale fell through and a month later I got another contract on it with another buyer also  using FHA. The lender saw there was an existing FHA case number on the property so we were able to use the same appraisal and we closed in 3 weeks.  The appraisal database they are building was definitely a help in this case.  12 months is too long to use an old appraisal unfortunately.

How soon can a new appraisal be used?

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