Date of Death Appraisal

[mle0318]

A client called me for a date of death appraisal. I haven't done one before. I would like to learn more about it before I accept this order. Is there anything I need to know? Is anything different from res appraisal? Thank you in advance!

 

[Overimprovement]

Just a retrospective market value. Your effective date simply is in the past. The farther back in time one goes, the more difficult it gets. It is also hard to ignore anything that happened in the market AFTER that point, but that must be done.

 

[Long Walk]

We include a Qualified Appraiser certification, but not sure if residential requires that.

 

[IlliniApp]

If it is part of an estate tax return (IRS oversight) you are supposed to use the definition of "fair market value" from IRS publication 561. In appraising farmland for estates I have used comps after the date of death and made an appropriate change for market conditions and have never had a problem.

 

[Airstream]

If it is part of an estate tax return (IRS oversight) you are supposed to use the definition of "fair market value" from IRS publication 561. In appraising farmland for estates I have used comps after the date of death and made an appropriate change for market conditions and have never had a problem.

Yep. Many think you can’t use any data after the date of death. But sometimes that may be the best data if in a rural area. Typically I use data if the date of contract has been before the date of death. I also try not to stretch out the later data beyond a month or two. The hardest part is going back and recreating market conditions. Thus old appraisals can be helpful. Also I generally state an EA that the condition of the property is the same as the date of inspection UNLESS I have a good reason otherwise. I haven’t had to do the “otherwise” so seldom do people make improvements after the date of death. But it is possible, and you need to be aware of it. Then you might need to depend upon the estates personal recollection. Charge accordingly.

 

[Tom4value]

A client called me for a date of death appraisal. I haven't done one before. I would like to learn more about it before I accept this order. Is there anything I need to know? Is anything different from res appraisal? Thank you in advance!

Not that difficult. You just use data (market conditions and comps) that were in effect as of the date of death. Just explain that in your report).

 

[Terrel L. Shields]

A client called me for a date of death appraisal. I haven't done one before. I would like to learn more about it before I accept this order. Is there anything I need to know? Is anything different from res appraisal? Thank you in advance!

Yes, the DOD is a retrospective appraisal. So state the date of value and the date of inspection and the date of report all three. Preferably use only sold dates before the DoD. Use the IRS definition of Fair Market Value and not the pre-printed forms you use for lenders.

Yep. Many think you can’t use any data after the date of death. But sometimes that may be the best data if in a rural area. Typically I use data if the date of contract has been before the date of death. I also try not to stretch out the later data beyond a month or two. The hardest part is going back and recreating market conditions. Thus old appraisals can be helpful. Also I generally state an EA that the condition of the property is the same as the date of inspection UNLESS I have a good reason otherwise. I haven’t had to do the “otherwise” so seldom do people make improvements after the date of death. But it is possible, and you need to be aware of it. Then you might need to depend upon the estates personal recollection. Charge accordingly.

Yes, and ask the trustee or heir/lawyer/whomever about the condition and if they did any work on it since the DoD.

 

[ZZGAMAZZ]

Yep. Many think you can’t use any data after the date of death. But sometimes that may be the best data if in a rural area. Typically I use data if the date of contract has been before the date of death. I also try not to stretch out the later data beyond a month or two. The hardest part is going back and recreating market conditions. Thus old appraisals can be helpful. Also I generally state an EA that the condition of the property is the same as the date of inspection UNLESS I have a good reason otherwise. I haven’t had to do the “otherwise” so seldom do people make improvements after the date of death. But it is possible, and you need to be aware of it. Then you might need to depend upon the estates personal recollection. Charge accordingly.

I respectively disagree with both of you. Retrospective data after the Effective Date cannot be used unless the data was readily available to a typical market participant on or before the Effective Date, accordng to (my) literal interpretation of AO34

 

[Terrel L. Shields]

I respectively disagree with both of you. Retrospective data after the Effective Date cannot be used unless the data was readily available to a typical market participant on or before the Effective Date, accordng to (my) literal interpretation of AO34

If you use a comp that closed after the DOD, your tax attorney or CPA client may insist that you use sales BEFORE the DoD...so ask them first if you want to use a sale.

 

[sputnam]

Just a retrospective market value. Your effective date simply is in the past. The farther back in time one goes, the more difficult it gets. It is also hard to ignore anything that happened in the market AFTER that point, but that must be done.

One helpful thing to remember.... Unlike with appraisals for mortgage lending, you can use comparables that sold after the effective date of the appraisal. You still have to consider market to market differences.