By Marc Kushner, The Informed Appraiser

“Complacency is a state of mind that exists only in retrospective: it has to be shattered before being ascertained.” -Vladimir Nabokov (1899–1977), Russian-born U.S. novelist, poet.

Retrospective valuation assignments typically pertain to property tax matters, estate or inheritance tax matters, condemnation proceeding, suits to recover damages, and similar situations. The average appraiser will encounter these situations from time to time, but typical run-of-the-mill assignments are performed on a “current market value” basis with no retrospective element. However, a careful reading of USPAP indicates that the vast majority of appraisal reports produced by appraisers on a regular basis actually qualify as retrospective valuations.

Per Standards Rule 2-2 (a/b/c) (vi), every report must “state the effective date of the appraisal and the date of the report”. The Comment to this rule states:

“The effective date of the appraisal establishes the context for the value opinion, while the date of the report indicates whether the perspective of the appraiser on the market and property as of the effective date of the appraisal was prospective, current, or retrospective.”

Statement on Appraisal Standards No. 3 (SMT-3) states, in part:

“Retrospective appraisal (effective date of the appraisal prior to the date of the report) may be required for….and similar situations. Current appraisals occur when the effective date of the appraisal is contemporaneous with the date of the report.”

Got that? The only time you have a current appraisal is when the report date and valuation date are one and the same. Most appraisers I know tend to use the inspection date as the valuation date. The inspection typically takes place prior to the date of the appraisal report. Consequently, the valuation date is usually earlier than the report date. In theory - according to USPAP, that is - this common scenario qualifies as a retrospective valuation, and should be treated accordingly.

Now I ask, do you know anyone who actually does this?