An appraisal is a professional appraiser’s opinion of value. The preparation of an appraisal involves research into appropriate market areas; the assembly and analysis of information pertinent to a property; and the knowledge, experience, and professional judgment of the appraiser. Appraisals may be required for any type of property, including single-family homes, apartment buildings, retail shopping centers, office buildings, industrial tilt-ups, and special use properties (religious facilities, service stations and free standing restaurants).
This can be achieved by:
The role of the appraiser is to provide objective, impartial, and unbiased opinions about the value of real property—providing assistance to those who own, manage, sell, invest in, and/or lend money on the security of real estate. Appraisers assemble a series of facts, statistics, and other information regarding specific properties, analyze this data, and develop opinions of value. Each appraisal assignment challenges the appraiser’s ability to put analytical skills into practice, exercise sound judgment, and communicate effectively.
Appraisals for lending purposes are considered to be a federally related transaction, which means that the Federal Deposit Insurance Corporation (or FDIC) or any regulated institution is involved and that the transaction requires the services of an appraiser. These types of appraisals are based on a the traditional definition of market value. Lenders utilize the services of an Appraiser to collect and analyze data to assist in lending decisions.
Appraisals for estate tax purposes are prepared for the Internal Revenue Service (or IRS), which has a different definition of market value than lending transactions.
While the two are somewhat similar, it is important to know the difference because if an appraisal submitted to the IRS has the wrong definition of value, it may be rejected
The other difference between these two appraisals are the intended users of the report. For appraisals used for federally related transactions, the intended user is primarily the lender. However, appraisals for estate tax purposes need to list the IRS as an intended user. Additionally, there are typically other intended users for these types of appraisals, such as accountants who will be preparing your tax documents.
An appraisal firm that specializes in performing appraisals for estate tax purposes is typically familiar with the differences in the preparation of estate vs lending appraisals. When considering an appraiser for your estate needs, it is important to interview them and ask if they have experience with preparing appraisals that go to the IRS. As additional screening, the quality of a report for lending is held to high standards and tax appraisals could be produced at much lower standards as they are less regulated, it might be beneficial to find an appraiser that is experienced with estate tax appraisals and won’t produce a lower quality report, which could ultimately cost your client and yourself frustration and money.
Retrospective appraisals for past deceased dates can be incredibly complex and the forensic work necessary to produce credible work increases. We have the experience and the data sources to uncover historical data helping us to produce reliable valuations regardless of the required value date.
In short, make sure you conduct your due diligence before hiring an appraiser. Appraisals (especially commercial real estate appraisals) can cost several thousand dollars, and if an appraisal prepared by someone inexperienced is rejected by the IRS, then you may have to order an entirely new appraisal.
Appraisals for estate tax purposes are prepared for the Internal Revenue Service (or IRS), which has a different definition of market value than lending transactions. While the two are somewhat similar, it is important to know the difference because if an appraisal submitted to the IRS has the wrong definition of value, it may be rejected. Retrospective appraisals for past deceased dates can be incredibly complex and the forensic work necessary to produce credible work increases. We have the experience and the data sources to uncover historical data helping us to produce reliable valuations regardless of the required value date. The Flynn Group is an experienced dependable Firm for Tax Planning Appraisals.
Appraisals for lending purposes are considered to be a federally related transaction, which means that the Federal Deposit Insurance Corporation (or FDIC) or any regulated institution is involved and that the transaction requires the services of an appraiser. These types of appraisals are based on a the traditional definition of market value. Lenders utilize the services of an Appraiser to collect and analyze data to assist in lending decisions. The Flynn Group Appraisers have decades of experience with Lending Purposed Appraisals.