Pamela Vasiliu
Sales Representative
pvasiliu@remax.net

RE/MAX Professionals Inc.
Brokerage
Independently owned and operated.

Date: Tuesday November the 21st, 2017 
416-236-1241

 

   

How long is my Market Evaluation good for?

January 23, 2016 - Updated: January 24, 2016

One question I hear often is: How long is the Market Evaluation on my home good for?

What a homeowner is really asking is "how old does the Market Evaluation have to be before it is no longer valid."

 

The reality is, an evaluation is only good for the day that the appraiser was at the house. The reason for this is that anything could happen after that to change the market value of your home. For example, a catastrophe like a tornado or fire that can destroy the home or neighborhood. If this happened then the home would no longer exist and the value be consistant with land value. Same if the neighborhood was destroyed, the value of that area would no longer be valid.

 

More market related or economic factors that will effect value, occur with drastic changes to industry or large businesses in the area. This would most likely have an affect on supply and demand, which inturn effect and local property values. On both ends, closing of industry or the surge of new business.

 

So you see, there’s many things that affect the market value of a home. It may be that these factors don’t change much in the area you are located in, and if that is the case then your Market Evaluation may be good for 3-6 months or longer.

 

Factors affecting how long an evaluation is good for

Following, are some of the factors that appraisers look at that influence value. Again, if these are stable in your area your evaluation will be good for a longer period of time, however if there are changes then expect the value of your home to be affected.

 

You should also note that each lender has their own guidelines relating to how old of an appraisal they will accept so you should check with yours to find out their guidelines. If you’re using an appraisal for something other than a mortgage loan, such as one used to sell your home, then what we’re discussing today will help you to determine if a past appraisal still reflects current market value.

 

Supply and demand- Anytime the supply and demand is changed the price of a home can be affected. The more inventory introduced into the market will result in property values declining. Likewise for a shortage of homes, as this will result in prices increasing. These two scenarios lead to what is known as a buyer’s market and  a seller’s market.

Date of comparable sales- Many lenders and their underwriters require the sales in an appraisal to have occurred within a certain time frame. If a market is appreciating and an appraisal occurred 3-6 months ago then additional sales may have occurred since the original appraisal that indicate a different value.

Appreciating and depreciating markets- As noted previously, if there has been rapid change in the market since an appraisal was performed then the appraisal will probably not reflect a current market value. The best appraisal is one that reflects the current state of the local real estate market.  If there are more recent sales that have occurred since the last appraisal then a new appraisal should be performed to include them.

Seasonality- One last point I would like to include is that of housing seasonality. While most areas experience some form of seasonality there are some that are affected by it more than others. Vacation real estate such as at the beach or in skiing communities will probably experience greater variations in property value depending on the time of year. Homes may sell for more or less during the summer and winter months. In situations like this it would be very important to use the most recent sales that reflect the current market.

 

As you can see, there are many factors that are considered when determining how long an Market Evaluation is good for. Lenders have their own guidelines which consider some of the points I made above. If you are a homeowner and would like to know if a past appraisal you had performed still reflects current market value then you will want to consider the points I brought up today. If you need a current evaluation on your home give me a call and let’s talk.

 

 

 


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