Estate Appraisals 101

IMG_9577A Realtor friend of mine called the other day with a referral to do an estate appraisal for home that they would be listing in Philadelphia, for an estate attorney.  After taking down all the necessary property information, I asked him “How many values will the estate need?” 
 
To which he replied “Why? How many values do I need?”
 
After I though about it, I realized that his question was a reasonable one.  How many values do you need for an estate appraisal?
 
The answer…well, that depends. 
 
Estate appraisals are needed when a property owner passes away and the finances of that person’s estate have to be settled.  They are typically ordered by the estate’s attorney, accountant or the executor, usually a family member or trusted friend of the deceased.  The primary reason for the appraisal is to aid in determining how the inheritance tax will affect the estate.  Depending on how the estate is being administered, an appraiser could be required to provide more than one value.  
 
The most common request that we receive is what we call a Date of Death Valuation.   This is simply a retrospective appraisal as of the date of passing.  It establishes the value of the property at the time of death.  Sometimes the appraisal is orders shortly after the DOD.  Other times, the estate may wait several years to initiate the appraisal process.  This involves looking at older sales data, if it’s available.  I believe our local TReND MLS service goes as far back as 1992.
 
Another request is for a current fair market value.  This is just as it sounds, a current value of the property regardless of the Date of Death. 
 
Some estates will require both values mentioned above.  This is typically the case when an estate has been drawn out over a prolonged period of time.
 
A few years back, we had a situation where we were contacted by an attorney to do an estate appraisal in Chestnut Hill.  The kicker here was that the husband passed away in 2004 and his estate was not settled at that time.  Remember, this was during the upswing of the boom market.  His wife passed away at the peak of the market in the Summer of 2006.  We were engaged to perform the appraisals in 2008, when the market was in free-fall.  So, given the market volatility during that time period, we were asked to provide three different values.  It required three sets of comparables and analysis.  You can imagine how different those three values were!
 
So if you are an attorney or an agent involved with an estate and need an appraisal, be sure to have an understanding of which appraisal  effective date you will need.  It may likely have a significant impact on the estate’s inheritance tax liability.
 
If you are an attorney in need of an appraisal for an estate you are representing, please feel free to give us a call.  If you know someone who needs an estate appraisal, please do not hesitate to contact The Coyle Group.  We will handle the situation with the professionalism and sensitivity it deserves.  Contact The Coyle Group at 215.836.5500 or appraisals@coyleappraisals.com   For more information please visit our website at www.TheCoyleGroupLLC.com   
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