Help I Inherited a House!
There are many reasons people need a home appraisal other than for a loan. One reason is for an estate. As in the TV show "Bless this Mess" where a couple inherit a dilapidated old farmhouse.
When someone inherits a house there is usually no tax owed from the date of the deceased. But from that time forward, after the date of the deceased, if the house increases in value, taxes are usually owed. Tax professionals call this the homes "basis." I have been called to appraise houses after many years have passed since the date of the deceased to establish that "basis." Sometimes I have to go back over 20 years to establish the basis for a house.
If the house has since been sold a drive-by appraisal is usually done.
So how do I appraise a house after 5 years have passed? First, I find out what the house was like 5 years ago. I might find that from an old MLS picture but usually the owners describe it.
I find out:
"Have there been any room additions?"
"What kind of condition was it in back then?"
"Have there been any significant improvements since those 5 years?"
Then the house, as it was described, is compared to the most similar sales like that description and sold 5 years ago. The real estate MLS service often has interior pictures of the sales which can be compared to the subject’s description.
At that point I compare the “5 year ago sales” to the subject and complete the report. To not confuse a reader of that report, I use a thing called the “Extraordinary Assumption. This Extraordinary Assumption tells the reader: "There was information given to me I must assume was accurate."
I also add, "If the terms of these extraordinary assumptions are not met it could have an effect on the value conclusions." In other words, if the information given me about the house was wrong, the value conclusion might also be wrong.
I then reconcile the data from 5 years ago and explain how I determined the value for the subject.
Also, throughout the report it should state the analysis is “As Of” a particular date.
There are many other considerations like were values increasing or decreasing in that area at that time? But these are my basic procedures for an estate appraisal.
I do estate appraisals for CPAs, Financial Planners, Attorneys, Accountants, Homeowners, and the IRS.