Retrospective and Current Value

[Grace]

I received a request from a lawyer (trust and estate) to do a "date of death" appraisal (which was 04/27/08) and a current fair market value appraisal. The property has been significantly remodeled since the date of death. After reading some old posts on this forum, it looks like I should be using the old 1004 form for the date of death appraisal and the new 1004 form for the current value. I don't know how, or have the time, to put together the narrative option. Is that what you guys would do? Do you charge full fee for both appraisals?

 

[Ariba]

I received a request from a lawyer (trust and estate) to do a "date of death" appraisal (which was 04/27/08) and a current fair market value appraisal. The property has been significantly remodeled since the date of death. After reading some old posts on this forum, it looks like I should be using the old 1004 form for the date of death appraisal and the new 1004 form for the current value. I don't know how, or have the time, to put together the narrative option. Is that what you guys would do? Do you charge full fee for both appraisals?

Since this is for a trust and estate I would not use either the new/old 1004 forms since it is not a mortgage financial transaction. Why not use the AI Summary Appraisal Report? I usually give a discount since you only have to measure and take pictures once. Maybe 1.50 to 1.75 times the normal fee.

 

[PropertyEconomics]

I received a request from a lawyer (trust and estate) to do a "date of death" appraisal (which was 04/27/08) and a current fair market value appraisal. The property has been significantly remodeled since the date of death. After reading some old posts on this forum, it looks like I should be using the old 1004 form for the date of death appraisal and the new 1004 form for the current value. I don't know how, or have the time, to put together the narrative option. Is that what you guys would do? Do you charge full fee for both appraisals?

Grace ... in my opinion you should not use the 1004 for either report. I would personally use the GPar form because your value definitions will be different. I will say that your intended use of the report could dictate something different, however, based upon what you have posted I dont think the 1004 form appropriate for either assignment.
As to fees, those are totally up to you. Your restrospective look is not so far back as the data will not be readily available to you, however, you will have to make a number of extraordinary assumptions regarding the retrospective appraisal based upon your post, ie condition of the property.
The data sets between the two dates will be entirely different and the only real advantage you have is you only have to measure the home one time. Make sure to have an engagement letter on this assignment and understand who your client is for both reports as they could be different, I simply do not know. Charge according to what you think your time is worth and the effort it will take to complete these assignments.

 

[Lee Lansford]

I received a request from a lawyer (trust and estate) to do a "date of death" appraisal (which was 04/27/08) and a current fair market value appraisal. The property has been significantly remodeled since the date of death. After reading some old posts on this forum, it looks like I should be using the old 1004 form for the date of death appraisal and the new 1004 form for the current value. I don't know how, or have the time, to put together the narrative option. Is that what you guys would do? Do you charge full fee for both appraisals?

Grace, Grace, Grace...before pursuing this assignment, you need to open yourself up to alternative ways ("forms") of communicating appraisals.

Never, not once, should you use one of Fannie's forms (with all of its certifications: have you read everthing that is found in these forms?) for anything other than mortgage work.

And, regarding the "Retro" appraisal: Are you aware of the necessity to make--prominantly state--certain Extraordinary Assumptions that are obviously very relevant to your assignment?

Tred carefully.

Lee

 

[Grace]

GP Residential Form

I'm looking through my list of a la mode forms and see a GP (General Purpose) Residential 3/2007 form that looks like it would work. Have any of you ever used this form before? I would add my scope of work statement, purpose of appraisal, etc.

 

[Richard Carlsen]

Grace;

You are getting good advice. 1004's and 2055's whichever editions are nothing more than reporting forms. They are not appraisals!

Do yourself a favor and learn to use a general purpose form for both. It will come in handy in the future when you do not want all of those FNMA certifications. On your GP form, you put in the certs and limiting conditions. For instance, make sure you omit the one about viewing the comps. It is not necessary for the assignment.

Learn to appraise; not fill out forms.

 

[Calvin the Airedale]

If you're being asked to do a date of death retrospective, the report will very likely be used in an estate disposition with the IRS. That being the case, perhaps you should be familiar with the standards expected of you by the IRS and the penalties which can acrue for violating those standards. I'm not saying this to scare you, but the penalties can be significant. They are there to place the fear of God (or at least the IRS) in your heart to make sure the job is done "according to Hoyle." (Oddly enough, I don't think USPAP is one of their requirements.)

Given these penalties, it should behoove you to take whatever time is necessary to write a credible report. Do not use FNMA forms! Done properly and defensibly, this can be a good sideline for your business.

Do not bill this assignment against your fee schedule for mortgage work. Give yourself plenty of time for turnaround.

PS. Find out exactly how and why the report will be used and who is likely to be working with it. That will, in part, determine SOW for all aspects of the assignment. For example, the more eyes on the report (users), the more effort on your part. Will a judge be seeing it? Heirs, how many? etc, etc.

 

[Richard Carlsen]

If you're being asked to do a date of death retrospective, the report will very likely be used in an estate disposition with the IRS. That being the case, perhaps you should be familiar with the standards expected of you by the IRS and the penalties which can accrue for violating those standards.

The IRS is not your client in this case and the IRS cannot mandate to you what reporting form you use. They can reject an appraisal if it is brought to them that is not IAW their standards. However, this is most likely for probate and you can do it on any form you like. The probate judge will most likely be most familiar with the FNMA form and anything else might slow the process. Just make sure that you are clear on the Intended Use and the Intended User. If the client has not said that it will be for dealing specifically with the IRS but is to "settle the estate", use that for your Intended Use. I have typically put "Estate settlement in probate" as the Intended Use. The Intended User is the trustee or attorney who hired you. If there is a question if it will be used with the IRS, ask the client if it is to be written to the IRS requirements. Asking the questions ahead of time makes life for you a lot simpler.

I have not done any estate work in about a year and a half but have done many over the years and every one of them was reported on a 1004 form and never a one came back for any reason, including IRS.

 

[Calvin the Airedale]

The IRS is not your client in this case and the IRS cannot mandate to you what reporting form you use. They can reject an appraisal if it is brought to them that is not IAW their standards. However, this is most likely for probate and you can do it on any form you like. The probate judge will most likely be most familiar with the FNMA form and anything else might slow the process. Just make sure that you are clear on the Intended Use and the Intended User. If the client has not said that it will be for dealing specifically with the IRS but is to "settle the estate", use that for your Intended Use. I have typically put "Estate settlement in probate" as the Intended Use. The Intended User is the trustee or attorney who hired you. If there is a question if it will be used with the IRS, ask the client if it is to be written to the IRS requirements. Asking the questions ahead of time makes life for you a lot simpler.

I have not done any estate work in about a year and a half but have done many over the years and every one of them was reported on a 1004 form and never a one came back for any reason, including IRS.

IRS estate tax provisions allow such date of death and post death valuations. True, the IRS is not your client, but if the report will end up in their hands, than by USPAP (to which the OP is likely bound by at least the terms of her licensure) they are at least an intended user.

They do not dictate the format. You decide what format will produce a credible result. I merely raise this issue because the IRS penalties for screwing up a valuation are significant. If this is the first time an appraiser is doing one for this purpose, perhaps they should know the implications and take whatever measures are necessary to do it right!

 

[Richard Carlsen]

True, the IRS is not your client, but if the report will end up in their hands, than by USPAP (to which the OP is likely bound by at least the terms of her licensure) they are at least an intended user.

Which is why the appraiser should ALWAYS define the Intended Use as well as the Intended User within the most limited parameters possible. If you think that there is a possibility that the report MAY be used for something but the client does not specify it in the assignment, you should define the Intended Use as narrowly as possible in order so as to not confronted with writing a report that must be able to satisfy a wide range of POSSIBLE uses.

Keep the Intended Use as narrow as you can in order to limit your liability for something where the report is used for something that you did not considered when doing your analysis and writing your report.