Historical or Retro-Active Real Estate Appraisal Valuation

Inactive Realtors in Ontario have the option to join an Ontario real estate Brokerage that help you keep your license active during your inactive times.  Save on real estate board fees and all your other needless office expenses too.  Park your license with a reputable and successful license holding Brokerage and still earn high commissions on all your sales, if any and your referrals.  Commissions are paid to you ASAP!

If you need to know the value of a piece of real estate anywhere from a month ago to a decade ago, it can be done. I’ll show you how it can be done. How it can benefit you or your clients. How an appraiser arrives at value even long after you have sold and moved away. As an experienced appraiser in Southern California with over 20 years experience I would like to share my real estate experience with you.

What is a historical appraisal? Really all appraisals are just a snap-shot of time. Most appraisals are for current market value. So the very day the appraiser comes out and inspects the property the value is valid on that date only and could become no longer valid the very next day. There could be an economic or natural disaster that could change the value overnight. With a historical appraisal the effective date is what the property was worth on that required date, anywhere from last month to 10 or more years ago.

What is the purpose of a historical appraisal? Many and varied reasons. Many accountants and financial planners need to determine the value of property held in estate when the owner dies. This is known as a “Date of Death” appraisal. The IRS will want a professional appraisal in the file to document the value as of that date. Attorneys use the historical appraisal to determine what assets belong to which party. For example let’s say a single person bought a home in 1985 but met and married current spouse in 1995 and separated in 2005. It would be important to know the fair market value on those dates for fair and equitable dissolution. The same would be true of business partners in a property or even family members that pooled financial resources but need to move on.

Are there limitations to what can be done? You would think if you had sold the property years ago and moved away that it could not be done. That’s not true. I recently appraised a property 10 years back, that at the time it was only 1/2 the size, was before the swimming pool, and the owner sold and moved out long ago. In this case an exterior “drive-by” appraisal was called for and the house was valued based on the previous size, minus the pool and without bothering the new owner. In this case both opposing appraisals came in very close to each other and settlement was that much easier.

A historical appraisal sometimes involves similar principles of New Construction Appraisals where only specifications on paper exist and the appraiser determines the value as if completed to your plans and specs. This is sometimes referred to as a Feasibility Study and used to determine if what you plan on building is worth what you expect it to be worth and what adjustments in the build will increase or decrease value.

In these more complicated retro-active or historical appraisals it is important to find an appraiser with years of experience in that market area. An appraiser with sufficient experience may have insight in this area before, during and after changes that have occurred over the last 20 years in that target market. Additionally there are certain appraisal formats that are acceptable for use and others that are in direct OREA violation.

Lastly in historic appraisals, the use of comparable data must all fall before the effective date of the appraisal. If your effective date is 1-17-94 all sales comparables must fall before that date, none after. If for example you needed to know the value of a property sometime around the Northridge earthquake, using sale comps before or after would have tremendous impact on that value.

If the appraisal is for court work we may be called on the witness stand to testify to our report and defend it against the opposing attorney and his witness. There are additional fees for this type of testimony. As a professional appraiser it’s my responsibility to be the best possible resource for my client.

If I can be of help to you I can be reached at activerain.com/cdiamond .

Appraiser/Author

Clifford Diamond, CREA

http://www.activerain.com/cdiamond

Article Source:

http://EzineArticles.com/?expert=Clifford_Diamond

Inactive Realtors in Ontario have the option to join an Ontario real estate Brokerage that help you keep your license active during your inactive times.  Save on real estate board fees and all your other needless office expenses too.  Park your license with a reputable and successful license holding Brokerage and still earn high commissions on all your sales, if any and your referrals.  Commissions are paid to you ASAP!

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