Understanding the Estate Appraisal
An estate appraisal is typically performed to determine the market value of real estate after the owner has died. A market value appraisal is required so that the estate can be divided among the heirs, if that was the desire of the owner and it was in their will. In addition, the appraisal can help to determine what taxes need to be paid. This type of appraisal usually has several other professionals involved including an accountant and attorney and the appraisal most likely has an effective date as of the date of death of the owner.
Date of Death Appraisal
Estate appraisals are sometimes referred to as date of death appraisals because the effective date of the appraisal is the date the owner died. This date can vary from several weeks old to months or years depending on how long it has taken to probate the estate. The appraisal can be either ordered by the heirs, accountant, or attorney involved in the case. Even though the date of inspection may be a current date the date of value, as I mentioned above, is the date of death and the property must be appraised considering the condition of the property on that date. It is important to know that if improvements were made after the date of death they would not be included in the valuation. For this reason the appraiser may need to interview people familiar with the property to determine its condition as of the effective date of value.
Divide Among Heirs or Sell?
Numerous options are available to the heirs with two common choices being to divide property ownership among the heirs or to sell the property and divide the proceeds among the heirs. If the second choice is picked then a current market value appraisal would need to be performed as well so that the current value could be used to market the home. The retrospective value and current value could be different if there has been significant changes in the real estate market between the two dates.
If you have any questions regarding estate or date of death appraisals feel free to contact me.