When a family member passes away, dealing with their real estate can raise questions that are unfamiliar to surviving family members, executors, and estate representatives.
One of the most important questions may be:
What was the property worth on the date the owner passed away?
The answer may require a date-of-death appraisal, also known as a retrospective real estate appraisal.
A date-of-death appraisal is an independent opinion of a property's market value as of a specific date in the past.
Unlike an appraisal developed to determine today's market value, a retrospective appraisal examines the property and market conditions applicable to an earlier effective date.
For example, if someone passed away in 2022 and the family needs to determine the home's value as of that date, an appraiser may prepare a retrospective appraisal today using relevant historical market information.
The objective is not to determine what the property would sell for today. It is to develop a supported opinion of its market value as of the specified historical date.
An independent residential appraisal may be useful for several purposes:
Estate administration and probate proceedings
Determining historical property values for inherited real estate
Supporting tax-basis documentation
Distributing real estate interests among heirs
Providing valuation information to attorneys, accountants, and estate representatives
Not every estate requires an appraisal. The need for one, and the appropriate valuation date, depend on the circumstances and the advice of the estate's legal or tax professionals.
The Internal Revenue Service provides additional information about the basis of inherited property in IRS Publication 551 — Basis of Assets.
Yes. A retrospective appraisal can often be prepared months or years after the effective date.
An appraiser may research historical property sales, public records, previous listings, market conditions, and available information about the property's physical characteristics at the time.
For example, a property may have been renovated after the owner's death. Those improvements would need to be considered carefully when developing an opinion of value as of the earlier date.
The availability and reliability of historical information are important factors in determining whether a credible retrospective appraisal can be completed.
A retrospective residential appraisal requires more than reviewing today's property values.
The appraiser considers relevant information from the historical period, which may include:
Comparable residential sales applicable to the effective date
Historical market conditions and property price trends
The property's location, site characteristics, and improvements
Available documentation of the property's condition at the earlier date
Changes to the property occurring after the effective date
The analysis must reflect the property's characteristics and the market information relevant to the historical valuation date.
Estate planning and estate settlement are related but different circumstances.
During estate planning, an attorney or financial professional may request information about the current market value of residential real estate.
After an owner's death, an executor, attorney, or tax professional may require a value as of a specific historical date.
Understanding the intended use of the appraisal helps determine the appropriate scope of work and effective date.
For general information about Texas probate procedures, visit the Texas State Law Library's Probate Guide.
Straughan Appraisal Services provides independent residential real estate appraisals for attorneys, estate representatives, executors, and individual property owners.
With more than 35 years of residential appraisal experience and involvement in the North Texas real estate industry since 1974, Stephen A. Straughan brings extensive local market knowledge to residential valuation assignments.
Services include estate and probate appraisals, date-of-death valuations, and other retrospective residential appraisal assignments.
If you have inherited residential property, are administering an estate, or need to determine a property's value as of a previous date, an independent residential appraisal may provide useful documentation.
Your attorney or tax professional can help identify the appropriate valuation requirements.
To discuss a residential appraisal in Rockwall or the surrounding North Texas area, contact Straughan Appraisal Services at www.straughanappraisals.net.
Straughan Appraisal Services
Experience Matters.
Serving the Real Estate Industry Since 1974.
This article provides general educational information and is not legal or tax advice.