The email tends to arrive early in the estate. The personal representative found a recent refinance appraisal in the decedent’s files, or one of the heirs had the house appraised for a loan, and the PDF is attached with a short question: is this enough for the inventory, or for the CPA?
It is a fair question. The report is recent, a licensed appraiser signed it, and it has a number on it. Usually, though, it cannot do the estate’s job. Not because anything is wrong with it, and not because a statute forbids it, but because it was built to answer a different question, for a different reader, as of a different date.
This piece is for the estate and probate attorneys in Denver Metro and Boulder County who field that email, and for the CPAs, fiduciaries, personal representatives, and trustees on the same files. I provide valuation services, not legal or tax advice. How a specific estate reports anything is a question for your attorney or CPA. What I can explain is why the two reports are not interchangeable, and what to send when you order the one the estate actually needs.
A refinance or purchase report is good work for its own purpose. This is about fit, not quality.
Two jobs on one house
Picture one house and two appraisal assignments.
Job A is a lender appraisal. A borrower applies for a purchase loan or a refinance. As I wrote in When You Need an Appraisal in Denver, when you are financing, the lender orders the appraisal and picks the appraiser. The lender is the client, and the report is written for the lender’s loan decision. The question it answers: what is this house worth in the current market, as of the day the appraiser saw it, to support that loan?
Job B is an estate appraisal. The owner has died, and the personal representative, the estate’s attorney, or the trustee engages an appraiser directly. The report is written for the people who will rely on it for the estate: counsel, the CPA, the personal representative or trustee. The question it answers: what was the fair market value of this house as of the date of death, for the probate inventory, the heirs’ basis, a trust settlement, or a federal estate tax return when one is filed? Because the date of death has usually passed by the time anyone calls, most of these are retrospective appraisals.
Same house. Same profession. Two different assignments.
Three things that cannot be swapped after the fact
Under the Uniform Standards of Professional Appraisal Practice (USPAP), an appraisal assignment starts by identifying the client, the intended use, the intended users, the effective date, and the type of value. Those choices shape the whole analysis, and they are stated in the report. Forwarding the PDF to someone new does not change them.
1. Intended use: a loan decision vs an estate purpose
A lender appraisal is developed to support lending. An estate appraisal is developed to support the estate’s purpose, whether that is the Colorado probate inventory, the heirs’ stepped-up basis, a trust distribution, a buyout between heirs, or a Form 706. Purpose drives the scope of the work: what the report has to address, how condition as of the effective date is handled, and which records the appraiser asks for.
The type of value follows the use, too. For federal estate tax, Treasury Regulation section 20.2031-1 defines fair market value as the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts, as of the applicable valuation date. A lender report is built on the value definition the lender’s requirements call for. The two definitions overlap a great deal, but the estate report should be built on the one the estate’s purpose calls for.
2. Effective date: today vs the date of death
A lender appraisal is effective as of the day the appraiser saw the house, because the lender is deciding about a loan now. The estate’s date is usually somewhere else:
- Colorado’s inventory statute, C.R.S. 15-12-706, asks the personal representative to list each item at its fair market value as of the date of the decedent’s death.
- IRS Publication 551 says the basis of inherited property is generally its fair market value at the date of death, or on the alternate valuation date if the personal representative chooses alternate valuation.
- The IRS describes the gross estate as an accounting of what the decedent owned at the date of death, at fair market value (IRS, Estate Tax).
So the refinance report almost always carries the wrong date. If the refinance happened months before the death, it describes the house and the market as they were then. If an heir refinanced after the death, it describes the house later, often after it was emptied, repaired, or updated. Either way, the date that governs the estate is a different date.
Changing the date is not a quick edit. As I explain in Preparing for an Estate Appraisal, a new date means a new comparable sales search, new market analysis, and a new report. If the CPA is weighing alternate valuation, that can add a second effective date; I cover it on the retrospective page linked above, and it is a separate conversation from this one.
3. Intended users: the lender vs counsel, the CPA, and the fiduciary
The lender report identifies the lender as the client and intended user. Under USPAP, a party who receives a copy of a report does not become an intended user just by receiving it. The personal representative, the attorney, the CPA, and the heirs were not identified as intended users in that assignment, even if one of them was the borrower, and the report was not written for them to rely on.
An estate appraisal identifies those readers at engagement. And an appraiser cannot simply put a new client’s name and a new date on an old report. A new client, a new intended use, or a new effective date is a new assignment, even when the same appraiser does the work.
A hypothetical: one house, two reports
Hypothetical example (not a real estate, client, or property): A Denver Metro homeowner refinances in March, and the lender’s appraisal is effective that month. The owner dies in November. By then the market has moved, and a roof leak that started over the summer has gone unrepaired. The personal representative finds the March report and forwards it to counsel.
The March report answers what the house was worth, to support a loan, in March. The inventory needs fair market value in November, with the house as it stood in November, for the estate’s readers. That is a different appraisal. The March report is still useful background. It is not the November value.
What a lender report can still do for the estate file
Send it to me anyway. A recent lender report can carry useful evidence:
- A floor plan sketch, gross living area, and room count as measured then
- Dated photos of the house’s condition as of that effective date
- Notes on updates, features, and the site
When condition on the date of death has to be reconstructed, the appraiser works from photos, records, and county data, as I describe on my date-of-death appraisals page. A recent lender report can be one of those records. It is a data point, not the deliverable.
Condition and market: as of which day?
A lender appraisal describes the house as the appraiser found it that day, and it may be made subject to repairs or completion the lender wants addressed. An estate appraisal describes the house as it stood on the date of death. Paint, cleanout, and repairs done after the death do not belong in that opinion, and neither does damage that happened after the owner died.
The market side works the same way. A date-of-death opinion relies on sales that had closed by that date and on the market that existed then, without hindsight. A current lender report relies on the current market. Neither can stand in for the other.
When the estate needs a current value too
Some estates need both a date-of-death value and a current one. The most common case is a buyout: one heir keeps the house and pays the others. That is a present-day transaction, and my estate buyout page explains why the date-of-death number and the buyout number are rarely the same. Trusts can raise their own dates as well, which I cover in Trust Appraisals in Denver.
The street runs both ways. If the heir keeping the house refinances to fund the buyout, the lender will typically order its own appraisal for that loan. The estate’s appraisal does not replace the lender’s, and the lender’s does not replace the estate’s.
Before anyone relies on a loan report for estate purposes: what to confirm
Before a refinance or purchase report goes into an estate file as “the value,” confirm with counsel or the CPA:
- What is the value for? The probate inventory, basis support, a trust distribution, a buyout, a Form 706, or several at once.
- Which date governs? Usually the date of death, but alternate valuation, a court order, or a trust event can set a different date. Confirm it before ordering.
- Who will rely on the report? The personal representative, trustee, attorney, CPA, or heirs.
- What changed between the lender report’s date and the governing date? Market movement, repairs, damage, cleanout.
- Does anyone also need a current value? For example, a buyout that has not closed yet.
If the answers point to a different use, date, or set of readers than the lender report was built for, the estate needs its own appraisal.
What to send when ordering an estate appraisal
- Property address and county
- The decedent’s name and date of death, and the reason that date governs (inventory, basis, trust accounting, Form 706)
- The intended use, and the intended users who will rely on the report
- Any prior appraisal, including the lender report, plus listing history and assessor records
- Dated photos, permits, repair invoices, and insurance records that show condition around the date of death
- What has changed since the date of death, who has keys, and whether the house is occupied, so the walkthrough can be scheduled
- Deadlines in play, such as the three-month inventory window covered in my probate inventory post
- Whether alternate valuation is under consideration, and whether anyone also needs a current value
My free Estate Appraisal Checklist puts most of this on one page. If you are the personal representative and still sorting out the order of operations, my personal representative page walks through it. From there I can tell you what the file needs, confirm the fee and timeline, and flag up front if the records are thin enough to require extraordinary assumptions.
Fees and timing
- Standard appraisals and non-complex retrospective date-of-death appraisals: $600 to $850
- Complex assignments (for example, more than one effective date or more than one property): quoted individually
- Turnaround: 3 to 5 business days for a standard current appraisal and 5 to 7 business days for a retrospective, both from the date of the walkthrough
You get the fee before you engage, and you work with me directly.
FAQ
The refinance appraisal was done a few weeks before the death. Is that close enough?
It is still a different use, different readers, and a different date. A short gap can make the lender report more useful as background, especially its dated photos. The estate still needs an opinion developed for its own use and users as of the date of death. Whether a particular document satisfies a particular filing is a question for counsel or the CPA.
Can the appraiser who did the refinance just update it for the estate?
Not by changing the name and date on the old report. That appraiser could take on a new estate assignment, with its own client, intended users, and effective date, if they are available and do retrospective work.
Is there a Colorado law that says a lender appraisal cannot be used for probate?
That is not the point I am making. C.R.S. 15-12-706 asks for fair market value as of the date of death, and C.R.S. 15-12-707 lets the personal representative employ qualified and disinterested appraisers to help establish that value when it may be subject to reasonable doubt. The issue is fit: a report built for a different use, users, and date. Legal questions about a specific estate go to the estate’s attorney.
Will you need to see the inside of the house?
Usually, yes, and I schedule a walkthrough. If the house has already sold or been substantially altered, an exterior observation can still support a retrospective opinion when the records support it. That gets decided during scoping.
The bottom line
A recent refinance or purchase appraisal is a real appraisal. It just belongs to a different job. The lender report answers a lender’s question, as of the day the appraiser saw the house. The estate needs fair market value as of the governing date, in a report written for the people who will rely on it. Use, date, and audience are set when the assignment starts, and they cannot be traded in later.
If you have an estate file with a lender report in it and a question about what the estate still needs, send me the address, the date of death, and what the value is for. I will tell you what is realistic. For more on the estate work I do, see my estate appraisals page.
Charles E. Volk, SRA | (720) 432-0474 | Charles@volkhaus.com
VolkHaus Appraisals provides real estate valuation services, not tax or legal advice. Confirm how any filing requirement applies to a specific estate with the estate’s attorney or CPA.
About the author
Charles E. Volk, SRA, is the principal of VolkHaus Appraisals in Denver, Colorado. He holds the SRA designation from the Appraisal Institute, has 24 years of residential appraisal experience across Colorado and the western United States, and serves on the Board of the Colorado Chapter of the Appraisal Institute. He works with estate attorneys, CPAs, fiduciaries, community banks, and private clients throughout Denver Metro and Boulder County.
Sources
- C.R.S. 15-12-706, inventory and appraisement: https://colorado.public.law/statutes/crs_15-12-706
- C.R.S. 15-12-707, employment of appraisers: https://colorado.public.law/statutes/crs_15-12-707
- IRS Publication 551, Basis of Assets: https://www.irs.gov/publications/p551
- IRS, Estate Tax: https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax
- Treas. Reg. section 20.2031-1, definition of fair market value: https://www.law.cornell.edu/cfr/text/26/20.2031-1