Do I Need A Probate Appraisal?

What is a Probate Appraisal?

You may have heard the term before but may still be asking yourself “what is probate and what is a probate appraisal?” Probate is the legal process a will must go through to prove its validity before anything can be distributed to the named beneficiaries. If this does not happen then the wishes of the person leaving the will and the legal requirements for the estate may not be met.

A probate appraisal is typically required by the court and is used to help settle the estate. The appraisal helps determine the value of the real estate to aid in distribution to the heirs as well as other reasons listed below.

A probate appraisal is required for multiple reasons. Some of these reasons include the following:

• If the real estate is sold to a relative of the decedent.
• When the real estate is divided up amongst the heirs.
• If a tax basis for the asset needs to be established in order to determine capital gains tax on the sale of the property.
• If the real estate was gifted.
• If the property is being sold to a third-party buyer.
• When listing it for sale.

How Long Do You Have To Probate An Estate?

Most people try to settle the estate as quickly as possible, however, sometimes this is not possible. Alabama law states that probate must be filed within five years after the death of the owner.

Appraisers can perform retroactive appraisals to determine the value in the past, however, this is not preferred and may cost more than an appraisal done shortly after the owner dies due to the additional time and research required. When an appraisal is completed for use in probate the date of value is the date of death, meaning the value of the property when the owner passed.

During a retroactive appraisal, an appraiser must perform research on the sales used and this becomes more difficult the older a sale is and the work involved usually results in a higher fee for the appraisal. It is also possible that the condition of the subject property changes, which can create challenges when reporting this information on the appraisal form.

When Should An Appraiser Be Hired?

While you may have five years in the state of Alabama to have the estate probated you may want to hire the appraiser as soon as possible. By doing it sooner than later you may save on the cost, considering what I mentioned previously about the cost involved in doing an appraisal with a retrospective value of several years ago.

In addition, properties change and what the property looks like today may be very different than what it looked like several years ago. By doing an appraisal as soon after the passing of the owner the data about the condition of the house will be more accurate and this will lead to a more accurate appraisal.

Information Needed By The Appraiser

1. The date the owner died. This is used as the date of value and helps the appraiser choose appropriate comparable sales and consider the temperature of the market at the time.
2. The name of the attorney the appraisal report should go to.
3. Information about what condition the property was in as of the date of death. If there have been improvements or renovations made to the property after the date of death it cannot be taken into consideration in the appraisal.
4. Any legal documents such as surveys or deeds that can aid the appraiser in the assignment.
5. Pictures of the property at the date of death if it varies significantly from what it looks like on the date of the appraisal inspection.

What To Look For In An Appraiser

When hiring an appraiser for a probate appraisal it is important to choose someone who meets the following requirements.

Experience- It’s important that the appraiser you choose have extensive experience performing probate appraisals as well as experience doing work within the neighborhood your home is located. This latter type of experience is known as “geographic competence“, meaning that they have practical knowledge of your neighborhood and market because they have actually done other appraisals in the area.

Education – As with any profession, it’s important to keep up to date on the latest trends and development within your field and appraising is no exception. Appraisers are required to have a certain amount of continuing education hours each year so the bare minimum of educational requirements is met.

I’ve covered professional designations below under credentials so won’t say anything else about that. If an appraiser is a member of a professional organization they are probably required to take more than the minimum state requirements which is good for you as a consumer because you will benefit from their knowledge.

Credentials – I am an SRA member of the Appraisal Institute and our requirements far exceed the state requirements. I’m not saying that your appraiser has to be a member of the Appraisal Institute but I would recommend that they hold some designation by a reputable appraisal organization because as I said they are going to normally have more education than someone that just holds the minimum state certification.

Recommendations – Besides getting a recommendation from your attorney another place to start your search is to ask friends and family if they have used someone in the past that they were pleased with. Another group of people to ask are local real estate agents. They have regular dealings with appraisers all the time and can tell you who they trust. Check out my Google Reviews to see what agents say about my reputation as an appraiser.

Remember, it’s about getting the most accurate appraisal value so that your attorney can properly and accurately probate the estate.

Question?
Do you have any questions about a probate appraisal and what is involved or need on to settle an estate? If so leave a comment below or reach me by email or phone. As always, thanks for reading.

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