What is a Retrospective Appraisal and Why You Might Need One

A retrospective appraisal is an opinion of value for a property as of a specific date in the past. It is different from a current appraisal, which reflects the value as of the date of inspection or report. A retrospective appraisal can be used for various purposes, such as:

Estate planning and settlement
Tax assessment and appeal
Divorce and dissolution
Bankruptcy and foreclosure
Litigation and damages
Insurance and disaster relief

In this article, we will explain what a retrospective appraisal involves, how it differs from a current appraisal, and what are the benefits and challenges of obtaining one.

How is a Retrospective Appraisal Performed?

A retrospective appraisal follows the same standards and principles as a current appraisal, but with some adjustments. The appraiser must use the same methods and approaches to value, such as the sales comparison approach, the cost approach, and the income approach. However, the appraiser must also consider the market conditions and trends as of the effective date of the appraisal, which may differ from the current market.

To do this, the appraiser must rely on historical data and information that was available or reasonably knowable as of the effective date. This may include:

Comparable sales that occurred before or around the effective date
Market reports and statistics that reflect the supply and demand of the property type and location
Economic indicators and forecasts that affect the property value
Property characteristics and condition that were observed or documented at or near the effective date

The appraiser may also use data that became available after the effective date, but only as a confirmation or verification of the historical data. The appraiser must not use data that is inconsistent or contradictory to the market expectations as of the effective date.

How is a Retrospective Appraisal Different from a Current Appraisal?

A retrospective appraisal differs from a current appraisal in several ways. The most obvious difference is the time gap between the effective date and the report date. Depending on the purpose of the appraisal, this gap can range from a few months to several years. The longer the gap, the more difficult it may be for the appraiser to find reliable and relevant historical data.

Another difference is the scope of work and analysis required for a retrospective appraisal. The appraiser must not only analyze the current market, but also reconstruct and interpret the past market. This may involve more research, verification, and explanation than a current appraisal. The appraiser must also disclose any assumptions, limitations, or uncertainties that affect the credibility of the retrospective value opinion.

A third difference is the intended use and users of the retrospective appraisal. A retrospective appraisal is usually requested for a specific legal or financial purpose, such as estate tax, divorce settlement, or litigation. The intended users are often parties who have an interest or stake in the property value as of the effective date. Therefore, a retrospective appraisal must comply with any applicable laws, regulations, or guidelines that govern its use and acceptance.

What are the Benefits and Challenges of a Retrospective Appraisal?

A retrospective appraisal can provide several benefits for different situations. Some of them are:

It can help determine the fair market value of a property as of a certain event or occurrence, such as death, divorce, or disaster.
It can help resolve disputes or conflicts over property ownership, rights, or interests among heirs, spouses, creditors, or claimants.
It can help reduce tax liability or penalties by establishing a lower value for a property as of a prior date.
It can help support legal claims or defenses by providing evidence of property value loss or damage due to negligence, fraud, or breach of contract.

However, a retrospective appraisal also poses some challenges for both appraisers and clients. Some of them are:

It can be difficult to find sufficient and reliable historical data to support the retrospective value opinion.
It can be costly and time-consuming to conduct a thorough and credible retrospective appraisal.
It can be subject to scrutiny and criticism by opposing parties or authorities who may question its validity or accuracy.
It can be affected by hindsight bias or selective memory that may influence the appraiser’s or client’s perception of the past market.

Frequently Asked Questions (FAQs)

How do I choose an appraiser for a retrospective appraisal?

You should choose an appraiser who has experience and expertise in performing retrospective appraisals for your property type and purpose. You should also check their qualifications, credentials, references, and samples of their work. You should ask them about their availability, fees, turnaround time, and scope of work.

How much does a retrospective appraisal cost?

The cost of a retrospective appraisal depends on several factors, such as:

The complexity and size of the property
The availability and quality of historical data
The purpose and use of the appraisal
The time and resources required for the appraisal

A retrospective appraisal may cost more than a current appraisal due to the additional work and analysis involved. The appraiser should provide you with a written estimate or agreement before starting the appraisal.

How long does a retrospective appraisal take?

The time required for a retrospective appraisal varies depending on the same factors that affect the cost. A retrospective appraisal may take longer than a current appraisal due to the extra research and verification needed. The appraiser should give you an expected completion date or timeframe for the appraisal.

How do I use a retrospective appraisal?

You should use a retrospective appraisal for its intended purpose and users only. You should not use it for any other purpose or users without the appraiser’s consent and modification. You should also follow any instructions or recommendations from the appraiser regarding the use and limitations of the appraisal.

How do I challenge a retrospective appraisal?

If you disagree or have concerns about a retrospective appraisal, you should first contact the appraiser and discuss your issues with them. You should provide them with any evidence or information that may support your position or refute their opinion. If you cannot resolve the matter with the appraiser, you may seek a second opinion from another appraiser or consult a legal or professional advisor.

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