Most appraisals are for current market value. So the very day an appraiser comes out and inspects a property, the value will be “as of today”. But there are appraisal that determines the value of a property from the past. It is called Retrospective value appraisal.
What is a Retrospective value appraisal? It is a historical determination of the market value. With a retrospective appraisal, the effective date of valuation is what the property was worth on a particular date in the past-maybe last month, last year or last 10 years ago.
What is the purpose of a historical appraisal? Many and varied reasons. 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 BIR want a professional appraisal in the file to document the value as of that date. Lawyers use the historical appraisal to determine what assets belong to which party.
Historical appraisal is also needed in court litigations involving expropriation of private lands for public use, and ejectment cases. The court will appoint appraisal commissioner to determine the market value of the property on the date of taking. If the property was taken from the owner last year or five years ago, the date of the valuation will be the same.
I recently appraised a property using retrospective appraisal. The property was expropriated for a government project. To determine the market value as basis for just compensation, my client hired my services. In this case, I valued the property based on the comparables, market data and analysis at the time the expropriation took place.
If the appraisal is for court litigation, we may be called on the witness stand to testify to our report and defend it against the opposing lawyers and his witness. There are additional fees for this type of testimony. But be sure your report is defensible and ready to thwart any questions of the opposing counsel.
In this more complicated retrospective or historical appraisal, it is important to hire an appraiser with experience and familiar in the market area. An appraiser with sufficient experience has insight in this area before, during and after changes that have occurred over.
As a professional appraiser it is my responsibility to be the best and be credible as possible for my client. If you have questions on real estate appraisal, feel free to contact me.