Retrospective or Date of death appraisal

[The Warrior Monk]

Contract date 7/10/08

I'd check on that...that's an awfully fast closing...five days after contract is signed. That rarely happens, unless it's a cash deal and they forego the title reports.

so your saying use the contract date as the date on the report.

Just report the facts...the property was in contract as of the subject's date of value and subsequently closed.

 

[Louis Pompeo]

The IRS allows you to use an "Alternate Date" that is 6 mos either before or after the Date of Death.

If you feel uncomfortable with Post-dated sales, you should use the alternate date of 6 months later.

 

[cybermenn]

Straight From USPAP

A retrospective appraisal is complicated by the fact that the appraiser already knows what occurred in the market after the effective date of the appraisal. Data subsequent to the effective date may be considered in developing a retrospective value as a confirmation of trends that would reasonably be considered by a buyer or seller as of that date. The appraiser should determine a logical cut-off because at some point distant from the effective date, the subsequent data will not reflect the relevant market. This is a difficult determination to make. Studying the market conditions as of the date of the appraisal assists the appraiser in judging where he or she should make this cut-off. In the absence of evidence in the market that data subsequent to the effective date were consistent with and confirmed market expectations as of the effective date, the effective date should be used as the cut-off date for data considered by the appraiser.


The appraiser cannot include in the analyses the fact that an event subsequent to the date of value in a retrospective appraisal changed the market conditions that existed as of the date of value. Using such information is not consistent with the intended use of the appraisal because buyers and sellers had no knowledge or expectation of that subsequent event as of the date of value.


However, an appraiser may disclose facts in an appraisal report about events that occurred subsequent to the date of value in an appraisal. Such a disclosure is particularly appropriate when the appraiser has reason to believe the intended users of the report could be misled by not knowing those facts in the current time frame, when the appraisal is being used.

 

[Couch Potato]

Use it.

Finishing one up to day have perfect sale but its about 20 days after the the date of death can i use this sale in the report. I remember learning about this in class but i cant find it in any books. For a little more background the subject is approx. 375 ac. & the comp is 362 ac. located within a 1/2 mile of the subject. sales this close of this type are very, very limited in this market place

thanks

chris

Use the sale. Unless something changed drastically in your local market around that time there is no reason not to use it. I typically set the cutoff at 30 days on such assignments. The point is to stick with sales that are relevant to your effective date. Properties that were listed, especially those under contract, at the date of death are relevant to the effective date. Having the details on their closed sale simply makes them better data.

 

[Kevin A. Spellman]

You have a sale that is a reliable indicator of value. The closing date after the effective date is not a problem, specifically in respect to the acreage.

 

[CCAAMO]

Finishing one up to day have perfect sale but its about 20 days after the the date of death can i use this sale in the report. I remember learning about this in class but i cant find it in any books. For a little more background the subject is approx. 375 ac. & the comp is 362 ac. located within a 1/2 mile of the subject. sales this close of this type are very, very limited in this market place

thanks

chris

Yes you can. That's the beauty of doing a retrospective valuation. If a time adjustment is warranted then make one although at 20 days I would not think one would be required.

A sale which closed at only 20 days after the date of death probable is a better indicator of value than a sale which closed 30 days prior.

 

[ZZGAMAZZ]

CHRIS123:

Post# 14 is verbatim from USPAP SMt-3, and it reads like it was written by Allen Greenspan (which is perfectly cool and definitive in my opinion).

Also in my opinion--although it's admittedly a stretch, but hey this is not a job it's an adventure--retrospective dates more than 6 or 9 months in the past provide the only true test of matched pairs analysis on market conditions. Presuming that sufficient data is available, I purposely include--with lotsa disclosure--that comparables 3 months prior to and 3 months after the retrospective date were used to confirm market trends, e.g., the impact of time on the opinion of value. During the past two--or possible the past five years, depending on one's perspective--"time" has exerted the prevailing influence on real estate markets; and I would not wish to overlook an opportunity to measure its true effect by including comparables both before and after the retrospective effective date--my rationale for doing so as the basis of the "logical cut-off."

 

[Wayne Tomlinson]

I attended a seminar several years ago where the presenters were a real estate and estate and farm attorney. The other presenter was a representative of the IRS.

A similar question came up.

The IRS person stated that there is no reason not to use sales after the date of death if it is a valid sale and a "good comp".

There was a lot of old guy protest saying that couldn't be true because of...............

There were a lot of reasons, but primarily it was that I never have done that because...some of the reasons posted ahead.

Then the IRS person asked who among the appraisers ever made an adjustment for time.
Of course everyone had done that.

Well the IRSer said, If you can make an adjustment forward, presumably upward, what is the reason that you cannot make an adjustment in reverse. The primary difference is that you know even better what the adjustment amount should be.


Aalo, ask your client. An estate appraisal can be either date of death or up to six months following date of death.

Use the sale. if it needs an adjustment do it and explain it.

Wayne Tomlinson