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Appraiser filling up an appraial report of a Chicago brick home during a home appraisal
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Residential Appraisal
When Do You Actually Need a Home Appraisal?

Most people think about an appraisal only when a lender orders one. So when do you need a home appraisal? More often than that, and a few of those moments carry real money, because the number ends up in a tax return, a settlement, or a closing statement.

By the end of this article, you’ll know:

  • Which life events usually call for an appraisal, and which ones don’t
  • When the lender handles it and when you order one yourself
  • What a buyer can do if the appraisal comes in low

When Do You Need a Home Appraisal for a Mortgage?

If you’re buying with a loan or refinancing, the lender orders the appraisal and you usually pay for it. The report protects the lender’s collateral. It tells them the home supports the loan amount.

That isn’t always the case anymore, though. On some loans, Fannie Mae’s underwriting system can offer value acceptance, which means no appraisal for that transaction. It’s the lender’s option, not yours. Two to four unit buildings and homes priced at $1,000,000 or more don’t qualify. If you’re curious about the trade-offs, we wrote about the risks of skipping the appraisal.

When there is an appraisal, you get to see it. Federal rules under the Equal Credit Opportunity Act require the lender to give you a copy promptly, or three business days before closing if that comes first. You can waive that timing, but think twice before you do.

Buying a Home? Read the Appraisal Before You Close

Buyers often skim the appraisal for one number and move on. Instead, read the whole thing. Check the square footage, the bedroom and bathroom count, and the condition notes. Then look at the comparable sales and ask whether they really match your block.

If the value comes in below the contract price, you have a few paths. You can ask the seller to lower the price, cover the gap in cash, or lean on an appraisal contingency if your contract has one. Your agent or attorney can tell you how many days you have and what the contract allows.

You can also challenge the number. On Fannie Mae loans, a buyer can request one reconsideration of value per appraisal, through the lender, with up to five alternative comparable sales. It has to happen before closing. So gather your sales early, and pick ones that are recent, close by, and similar in size.

Paying cash? No lender means no required appraisal. Still, a cash buyer has the most to lose from overpaying, and an online estimate won’t catch a failing roof. Our piece on Zestimates versus appraisals explains why the two numbers drift apart.

Dropping PMI Before It Ends on Its Own

If you put down less than 20 percent on a conventional loan, you’re probably paying private mortgage insurance. According to the Consumer Financial Protection Bureau, you can ask your servicer to cancel it once your balance reaches 80 percent of the home’s original value. The servicer can ask for evidence, such as an appraisal, that the value hasn’t dropped below that original figure.

PMI also ends automatically at 78 percent of original value if you’re current on payments. Your servicer, or investors like Fannie Mae and Freddie Mac, may allow earlier removal under their own guidelines. Before you pay for a report, call your servicer and ask which appraisers and report types they accept. If they’ll take an independent report, PMI removal is one of the residential assignments we handle across Chicago.

Inheriting, Settling an Estate, or Gifting a Home

This is where a lot of families get caught. When you inherit a house, IRS Publication 551 says your basis is generally its fair market value on the date of death. An alternate valuation date can apply if the estate’s representative elects it. That basis affects the tax when you sell, so a documented value matters even if you plan to sell quickly.

The appraisal in that case looks backward. It values the home as of the date of death, sometimes months or years later. Our guides on appraisals for inherited property and the date-of-death appraisal walk through how that works.

Gifts follow different basis rules, tied to what the giver paid. A donation to charity brings its own qualified appraisal requirements. Either way, your CPA should weigh in on the tax side before the deed changes hands.

Divorce, Buyouts, and Splitting a Home

When a marriage ends and one spouse keeps the house, the buyout number usually starts with an appraisal. The attorneys or the court set the valuation date, and the appraiser values the home as of that date. If both sides hire their own appraisers, the reports often differ, and the gap becomes part of the negotiation. Once you have a value, our marital home buyout calculator gives a rough sense of the payment after the mortgage and other liens.

The same logic applies when siblings split an inherited home or co-owners part ways. One person keeps the property, and everyone needs a value they can trust. We cover this in more depth in appraisals in divorce proceedings and our article on marital home buyouts.

Appealing a Property Tax Assessment

If your assessment notice looks high, you can appeal. In Cook County, the Board of Review hears appeals from owners who believe their property is over-valued. An appraisal is one of the stronger pieces of evidence you can bring, especially when your home differs from what the assessor’s model assumed. Our Cook County Board of Review guide covers timing and what the Board looks at.

Selling Without Guessing

Nobody requires a seller to get an appraisal. But a pre-listing appraisal can keep you from pricing too high and sitting, or too low and leaving money behind. It also gives you a head start if the buyer’s appraisal comes in short. Here’s how appraisers help sellers price a home.

Start With Why You Need the Number

The reason drives everything else. A lender’s appraisal answers the lender’s question, at the date of inspection. An estate, a divorce, or a tax appeal usually needs a different date and a report written for that purpose. So before you order anything, know who will read the report and what date the value has to match. Then ask the appraiser to build the assignment around that.

Not Sure Which Appraisal Fits Your Situation?

Tell us what happened, whether it’s an inheritance, a buyout, PMI, or a tax notice, and we’ll scope the right report and the right date of value.

Tell Us What You Need

Frequently Asked Questions

Do I need an appraisal if I’m paying cash for a home?

No lender means no required appraisal. Many cash buyers still order one because they carry all the risk if they overpay, and an independent appraiser looks at condition and local sales that online estimates miss.

Can I get a copy of my lender’s appraisal?

Yes. For a first mortgage on a home, federal rules require the lender to give you a copy promptly after it’s done, or three business days before closing if that comes first. You can waive the timing, but reading it early gives you time to spot errors.

What can I do if the home appraisal comes in low?

You can renegotiate the price, cover the difference, or use an appraisal contingency if your contract has one. On Fannie Mae loans, you can also request one reconsideration of value per appraisal through your lender before closing, with up to five alternative comparable sales.

Can I reuse my mortgage appraisal for an estate or divorce?

Usually not. A mortgage appraisal answers the lender’s question as of the inspection date. Estates and divorces typically need a value as of a different date, in a report written for that purpose, so a new appraisal is the safer route.

Do I need an appraisal to remove PMI?

Often, if you ask to cancel it early. The CFPB says you can request cancellation once your balance reaches 80 percent of the original value, and the servicer can ask for evidence, such as an appraisal, that the value hasn’t dropped. Check with your servicer before ordering one.

About PahRoo Appraisal & Consultancy

Whatever brought you here, an inheritance, a buyout, or a tax bill, PahRoo starts by pinning down the purpose and the date of value, then builds the report around them. We’re headquartered in Lincolnwood and also serve Dallas, Philadelphia, Phoenix, and Naples, with residential, commercial, litigation support, and property tax appeal work. See our Chicago real estate appraisal services or learn more about our team.

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Empty office suite photographed as evidence for a vacancy adjustment tax appeal.
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Property Tax
Documenting Vacancy, Deferred Maintenance, and Obsolescence in a Tax Appeal

A vacancy adjustment tax appeal rarely loses because the building was full. It loses because nobody can prove how empty it was, or for how long. The same goes for a failing roof or a floor plan tenants walk away from. If the condition isn’t documented and tied to a number, the Assessor and the Board of Review have little reason to move.

By the end of this article, you’ll know:

  • What the Cook County Assessor’s vacancy policy accepts, and where it stops
  • How an appraiser turns deferred maintenance and obsolescence into a dollar figure
  • Which records a property manager should keep before the next filing window

What a Vacancy Adjustment Tax Appeal Has to Show

Start with the Assessor’s rules, because they are narrower than many owners expect. The Cook County Assessor’s vacancy policy treats homes and commercial buildings differently. A house, condo, or two-to-six-unit building gets vacancy relief only after a casualty such as a fire or flood. Commercial property, which includes apartment buildings over six units, has more room.

For commercial buildings, the policy looks for space that isn’t serving its intended use because of conditions outside the owner’s control. It recognizes three situations. One is market vacancy, where a ready-to-occupy building sits empty despite real leasing effort. Another is a renovation that leaves the whole building unusable and earning nothing. The last is a casualty. Any single event supports no more than 24 months of reduction, and land value is never adjusted for vacancy.

Then comes the paperwork. A market vacancy claim needs a 12-month vacancy affidavit, a rent roll, proof of marketing, utility bills, and dated photos. A renovation claim also needs the contractor’s scope of work, a timeline, permits, and the general contractor’s contact information. A casualty claim needs the fire, flood, or disaster report.

The policy also says some commercial vacancy is normal and expected. So a building running at a typical vacancy rate has little to claim. The Assessor already builds a market vacancy factor into its income valuation, which we covered in our piece on NOI and cap rates in commercial appeals. The appeal starts where actual vacancy runs past what the model assumed.

The math is specific, too. For market and renovation vacancy, the policy takes half of the year’s weighted vacancy and subtracts the vacancy already in the original value. Consider a hypothetical building with 40 percent weighted vacancy and an 8 percent factor already in the model. Half of 40 is 20, and 20 minus 8 leaves a 12 percent reduction. If the building is assessed at $250,000, that comes to $30,000 off. The land stays where it was.

The Board of Review has its own list. Under its official rules, Rule 21 asks for a vacancy affidavit and dated photos of the vacant interior space. It also wants an affidavit on how long the space sat empty, why, and what was done to lease it. Rule 20 adds lease and income records. If your client files at both levels, plan on two overlapping packages.

Deferred Maintenance Needs a Cost Attached

Deferred maintenance is physical deterioration the owner put off fixing. Think of a worn roof membrane, rooftop units past their service life, or a parking lot breaking apart. Mentioning these in a brief doesn’t change a value. The value moves when an appraiser shows what a buyer would deduct for them.

Appraisers sort physical deterioration by whether a repair is practical. If the repair restores the lost value at a sensible cost, the item is curable, and the cost to cure usually measures it. If the repair isn’t practical, the loss tends to show up in effective age instead. For example, a well-kept 40-year-old building might carry an effective age of 25. A neglected one of the same vintage might carry 45, with a shorter remaining life to match.

Contractor bids help, but only when they are dated near the lien date and scoped to the real problem. A full roof replacement bid proves little if the roof only needed patching. Buyers also rarely pay dollar for dollar on every repair. So a careful appraiser tests the bid against market behavior rather than taking it whole.

Timing trips up a lot of condition claims. The Board’s Rule 19 requires appraisals to value the property as of the January 1 lien date. Rule 14 asks that the front photo in a brief show the condition as of that date as well. Photos taken after a spring repair don’t prove what January looked like. Neither do photos of damage that happened in March. Depreciation sits at the center of the cost approach, which is why condition arguments often lean on it.

Functional and External Obsolescence Need Market Proof

Obsolescence is harder to see and harder to prove. Functional obsolescence is a loss that comes from the building’s own design. A warehouse with low clear heights when tenants want taller space is one example. An office floor plate too deep to divide for small tenants is another. Some of it can be fixed at a reasonable cost, and some of it can’t.

External obsolescence comes from outside the property line. A road change that pulls traffic away from a retail strip can cause it. So can a large employer closing nearby. Nothing the owner does on site will cure it, so appraisers usually treat it as incurable.

Neither kind shows up clearly in a photo. An appraiser measures it with market evidence instead. That often means comparing rents or sales of buildings with and without the problem. It can also mean capitalizing the income the problem costs each year. The appraiser’s job is to measure the loss. The attorney decides how to argue it, and the Board decides what weight it gets.

Long vacancy is sometimes a symptom of obsolescence rather than a passing market problem. When a building stays empty past the 24-month window, vacancy relief runs out. At that point the stronger argument may be what the building is actually worth in its current form, with its design or location problems priced in.

What Property Managers Can Start Collecting Now

Most of this evidence sits with the property manager, not the attorney. It is also far easier to keep it monthly than to rebuild it a year later. If you manage commercial space in Cook County, a short routine covers most of what the Assessor and the Board ask for.

  • Take dated interior photos of every vacant suite each month, and as close to January 1 as you can.
  • Keep a month-by-month occupancy log by suite and square footage. That log becomes the vacancy affidavit.
  • Save every listing, broker agreement, and marketing flyer, with the dates they ran.
  • File utility bills for vacant space, and note any months that are missing.
  • Keep work orders, deferred repair lists, and contractor bids with their dates.
  • Pull permits and the contractor’s scope of work before any renovation starts.

None of this takes a judgment call. It’s record keeping. But it often decides whether the attorney can file a vacancy or condition claim at all.

Tie Every Claimed Impairment to a Record and a Number

Before filing, sort the client’s story into its parts. Vacancy needs the affidavit trail and has to fit one of the Assessor’s categories. Deferred maintenance needs dated photos and a supportable cost to cure. Obsolescence needs market evidence an appraiser can quantify. If a claim has no record behind it, consider cutting it, because weak items can pull down the credible ones. Then bring the appraiser in early, while there is still time to inspect the building and review the records before the filing window closes.

Can You Prove What’s Dragging the Value Down?

We document the condition and measure what vacancy, deferred repairs, and obsolescence cost in market value as of the lien date.

Document the Impairment

Frequently Asked Questions

Does vacancy affect a property tax assessment in Cook County?

It can. The Cook County Assessor considers commercial vacancy when space isn’t serving its intended use because of conditions outside the owner’s control, such as a market lease-up, a full-building renovation, or a casualty. Residential vacancy counts only after a casualty like a fire or flood. Land value is never reduced for vacancy.

How long can a vacancy reduction last?

Under the Assessor’s vacancy policy, a single event supports no more than 24 months of full or partial vacancy reduction. A building that stays empty longer may have a different problem, such as obsolescence, which calls for a valuation argument rather than vacancy relief.

How do I prove deferred maintenance in an appeal?

Start with dated photos that show the condition as of the January 1 lien date, repair records, and contractor bids scoped to the actual problem. An appraiser then measures what a buyer would deduct for that condition, often through cost to cure or effective age.

What is functional obsolescence?

Functional obsolescence is a loss in value caused by the building’s own design, such as a layout or ceiling height the market no longer wants. Some of it can be fixed at a reasonable cost and some can’t. An appraiser measures it with market evidence, not photos alone.

Can poor condition lower my assessment?

It can, if the evidence shows the condition reduced market value as of the lien date. The Board of Review weighs evidence case by case, and its rules treat appraisals that violate USPAP or Illinois law as not credible. A documented, quantified condition claim gives the Board something concrete to weigh.

Appraisals Built for Cook County Condition Claims

Condition and vacancy evidence is strongest when an appraiser has walked the building and photographed it. PahRoo Appraisal & Consultancy works from its Lincolnwood office on Cook County tax appeals, Board of Review appraisal evidence, and commercial appraisals. Michael Hobbs, MAI, leads the firm and is available for expert testimony when a case goes further.

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Commercial AppraisalsFor Bankers
Commercial Appraisals for Lending and What Banks Require

When a credit officer orders a commercial appraisal for lending, the report has two jobs. It has to support the loan decision, and it has to hold up when an examiner pulls the file. Most of what banks require comes from one set of federal rules and the guidance built on them. So it pays to know where loan files usually come up short.

By the end of this article, you’ll know:

  • When a federally regulated lender needs a full appraisal, and when an evaluation will do.
  • What appraisal independence means for who orders the report and who talks to the appraiser.
  • What credit review should check before the appraisal goes to committee.

What a Commercial Appraisal for Lending Has to Meet

The rules trace back to Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, better known as FIRREA. Title XI requires each federal banking agency to set appraisal standards for the institutions it oversees. So when a banker asks for a FIRREA appraisal, they mean a report that meets those agency rules.

Each agency publishes its own version. The OCC’s sits in 12 CFR Part 34, Subpart C, and it sets a clear minimum. The appraisal must follow USPAP, unless safe and sound banking calls for a stricter standard. It must be in writing, with enough analysis to support the decision to make the loan. It must also use the regulation’s definition of market value.

The same rule asks for deductions and discounts where they apply. That covers proposed construction or renovation, partially leased buildings, and leases written below market. Finally, a state licensed or certified appraiser has to do the work. But a credential alone does not prove competency, according to the rule. Experience with the property type counts too.

When an Evaluation Will Do and When It Won’t

Not every loan needs a full appraisal. The rule exempts several kinds of transactions, and three thresholds come up most often.

  • Commercial real estate transactions with a transaction value of $500,000 or less.
  • Business loans of $1 million or less, if repayment does not depend mainly on real estate sales or rental income.
  • Residential transactions with a transaction value of $400,000 or less.

For a loan, transaction value means the loan amount, not the property’s value. And an exempt loan still needs an evaluation of the collateral. The agencies raised the commercial threshold from $250,000 to $500,000 in 2018. Keep that in mind, because the interagency guidance still quotes the older figure.

There is a line on the other end, too. Once the transaction value reaches $1 million, the rule calls for a state certified appraiser.

Consider two hypothetical loans. A $450,000 loan on a small retail building falls under the commercial threshold, so an evaluation would satisfy the rule. A $1.2 million loan on the same kind of building needs a full appraisal by a certified appraiser. Still, an exemption only sets the minimum. The guidance says lenders should consider an appraisal for higher-risk deals even when an exemption applies.

An evaluation still needs substance. The guidance expects it to describe the property and its use, estimate market value as of an effective date, and explain how condition was confirmed. It should also name its sources and, when a person prepares it, identify that person.

Appraisal Independence Starts With Who Orders the Report

The lender or its agent has to engage a fee appraiser directly. The appraiser can have no interest in the property or the deal. Staff appraisers, in turn, have to stay independent of lending, investment, and collection.

The Interagency Appraisal and Evaluation Guidelines go further. If a bank uses an appraisal the borrower ordered or provided, it violates the agencies’ rules. Independence also suffers when the borrower recommends the appraiser, or when loan production staff pick one for a deal.

That does not mean the appraiser works in silence. A lender may share the sales contract on a purchase. It may also ask the appraiser to consider more information about the property or the comps, and to fix factual errors. What it can’t do is push the appraiser, directly or indirectly, toward a number.

Engagement letters belong in the same conversation. The guidance says lenders should use written engagement letters, and work should not start until the appraiser is engaged. A good letter states the intended use and the property interest. It also says whether you need an as is value alone, or prospective values upon completion or stabilization as well.

Using an Appraisal Another Bank Ordered

Participations and loan transfers raise a common question. Can you rely on an appraisal another lender ordered? Under the rule, yes, if another financial services institution engaged the appraiser directly. The appraiser also must have had no interest in the property or the transaction.

Even then, the receiving bank has to review the report as closely as it would its own and document that review. It should also confirm the original lender, not the borrower, ordered it. And it must not accept a report altered to hide the original client.

What Credit Review Should Check Before Committee

Every appraisal used for lending needs a review for USPAP compliance. Reviewers should be independent of the transaction and shielded from loan production staff. A reviewer cannot change the value the original appraiser reached. But a qualified reviewer can develop a second opinion of market value through a USPAP review. In practice, these are the points worth checking first.

  • The approaches. The appraisal has to include each approach that applies and explain any it leaves out. Our guide to the three approaches to value shows how each one works.
  • The income support. On income property, trace the net operating income back to the rent roll and the cap rate back to market evidence.
  • The value premise. For construction loans, banks generally ask for the as is value, plus prospective values if the deal calls for them. Those should rest on current and reasonably expected market conditions.
  • The leases. Vacancy in a partially leased building and leases below market should show up as deductions where they apply.

Those details feed straight into loan sizing. Take a hypothetical building appraised at $2.8 million from $196,000 of net operating income at a 7 percent cap rate. A $1.96 million loan sits at 70 percent loan-to-value. If the market supports 8 percent instead, the same income points to $2.45 million. Then that loan runs at 80 percent of value.

What Borrowers Can Do to Keep the Appraisal Moving

If you own the property or are buying it, you can’t hire the bank’s appraiser. But you can make the assignment faster and cleaner.

  • Tell your lender early if a recent appraisal exists. The guidance lets a borrower point the bank to it, so the bank can request it directly from the lender that ordered it.
  • Have current leases, a rent roll, and two or three years of operating statements ready before the inspection.
  • Pull together the survey, any environmental reports, and a list of recent capital work with costs.
  • Plan for access to tenant spaces, the roof, and mechanical rooms.

Questions about value should go through your loan officer, not to the appraiser. Also ask the lender early about timing and whether you will get a copy of the report. Practices vary from bank to bank, and knowing up front keeps the closing date realistic.

Most Lending Appraisal Problems Start at the Order

A borrower-supplied report or a vague engagement letter causes more trouble than any single comp. Get the order right, and the review tends to go faster. This article summarizes the federal rules in plain terms. How your institution applies them is a question for your compliance team and counsel.

Have a CRE Loan Heading to Credit Committee?

PahRoo prepares USPAP-compliant commercial appraisals with the support a reviewer looks for, from the rent roll to the cap rate.

Request a Commercial Quote

Frequently Asked Questions

What appraisal do banks require for a commercial loan?

A federally regulated bank generally needs a written, USPAP-compliant appraisal from a state licensed or certified appraiser the bank engages directly. Commercial real estate loans of $500,000 or less, and certain business loans up to $1 million, can use an evaluation instead. At $1 million and above, the appraiser must be state certified.

What is a FIRREA appraisal?

It is an appraisal that meets the rules the federal banking agencies adopted under Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989. Those rules require USPAP compliance, a written report with enough analysis to support the loan decision, the regulation’s definition of market value, and an independent appraiser.

Can a borrower order the bank’s appraisal?

No. Interagency guidance says a lender’s use of a borrower-ordered or borrower-provided appraisal violates the agencies’ appraisal regulations. A borrower can tell the lender that an appraisal already exists, and the lender can then request it directly from the institution that ordered it.

What is the difference between an evaluation and an appraisal?

An evaluation is an estimate of market value allowed for transactions exempt from the appraisal requirement, such as commercial real estate loans of $500,000 or less. It does not have to meet professional appraisal standards or be prepared by a licensed or certified appraiser. An appraisal must meet both.

What is appraisal independence?

It means the appraiser’s judgment stays separate from the lending side of the deal. The lender or its agent engages the appraiser directly, the appraiser has no interest in the property, loan production staff do not pick the appraiser, and no one pressures the appraiser toward a value.

Commercial Appraisals Built for Credit Review

Lenders, owners, and their advisors bring commercial assignments to PahRoo Appraisal & Consultancy across Chicago and Cook County, Dallas-Fort Worth, Philadelphia, Phoenix, and Naples. Our commercial appraisal services page lists the property types we cover. For Chicago-area loans, our Chicago appraisal services page explains how to place an order.


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Property Tax
NOI and Cap Rates Under Scrutiny in Commercial Tax Appeals

When the Assessor and your client’s appraiser both use the income approach, why do the values sit so far apart? In an income approach tax appeal, the answer usually sits in two inputs, net operating income and the cap rate. Both are getting a harder look in 2026, because Cook County changed how real estate taxes enter the cap rate.

What you will take from this article

  • How the Assessor builds a commercial value, and what changed for 2026
  • Which income records the Assessor and the Board of Review expect in a file
  • How a lender can test a reassessed value against a borrower’s real income

How the Assessor Builds Value in an Income Approach Tax Appeal

The Assessor’s Office values most commercial property with the income approach, applied through mass appraisal. Its published method starts with potential gross income at estimated market rents. Then it takes out vacancy and collection loss and subtracts typical operating expenses. The resulting net operating income is divided by a market cap rate. If you want the logic behind each step, our guide to how appraisers use the income approach walks through it.

The inputs reflect market data and past appeals on similar properties, so they describe a typical building, not your client’s. That is why the model can miss a below-market lease or a tenant who stopped paying. The Assessor’s own commercial brochure addresses this. It says a below-market lease may support a reduction if detailed income and expense records back it up.

After the value is set, the county ordinance level applies. Office, industrial, and retail buildings typically assess at 25% of market value, while apartment buildings assess at 10%.

Cook County reassesses in thirds, and the south and west suburbs are in the 2026 cycle. Township windows open on a rolling schedule, so the Assessor’s calendar is the place to confirm a date. Our earlier piece on the 2026 south suburbs reassessment covers when a second opinion makes sense.

The 2026 Loaded Cap Rate Changes the Arithmetic

Starting in 2026, the Assessor applies a loaded cap rate to all commercial properties under its cap rate policy. Real estate taxes no longer come out as a line item in operating expenses. Instead, a tax load gets added to the market cap rate.

The load is the level of assessment times the equalization factor times the tax rate. The policy’s own example multiplies 25% by a 3.0355 equalization factor and an 8.970% tax rate. That gives 6.81%.

The south townships carry a wrinkle. The Assessor estimated their 2026 tax rates by mirroring the 2023 actual rates, and it uses the 2023 equalization factor. Your client’s current bill may tell a different story, so the load is worth comparing with it.

Consider a hypothetical building with $500,000 of net operating income before real estate taxes. Assume a 7.00% market cap rate and a 6.81% tax load. The loaded rate is 13.81%, so the indicated value is about $3,620,565. At the 25% level, the assessed value would be about $905,141.

Now check it from the other direction. Taxes at that value run about $246,560, which leaves about $253,440 of income. Capitalized at 7.00%, that returns roughly $3.62 million, the same answer. The two methods agree because the taxes sit in one place only.

Mixing them breaks the math. Suppose a report deducts $200,000 of actual taxes and also applies the loaded rate. Value falls to about $2,172,339, roughly 40% lower, because the taxes were counted twice. Rate moves matter too. A 50 basis point rise in the market cap rate lowers value to about $3,494,060 in the same example. That is a drop of about 3.5%. These figures are illustrative and are not Assessor data.

So ask one question of every income analysis in your file. Do the taxes sit in the NOI or in the rate? The answer has to match on both sides of the formula, and the report should say which basis it used.

Where Net Operating Income Gets Tested

Appeals on income-producing property now include Real Property Income and Expense filing. The online filing page warns that missing or incomplete information may produce a no change result. The Assessor’s brochure lists three years of income and expense records. It also asks for rent rolls, leases, an appraisal if available, and recent sales documents.

At the Board of Review, one commissioner’s published guidance for leased property covers the rent roll and leases. It also lists three years of IRS Schedule E, photographs, and a vacancy affidavit. Each township is open at the Board for a 30-day window. For the appraisal side, see what a tax appeal appraisal must contain.

Clean records come first. Strip out depreciation, debt costs, capital expenses, and payments to owners. The Assessor leaves those out of operating expenses too. Our overview of net operating income in commercial real estate shows what belongs above the line.

The harder part is reconciling the owner’s actual income with market income. Contract rents above or below market change the picture. A Board of Review summary of the 2022 appeal cycle says the Board checks whether leases sit at market rates. Your appraiser supports that comparison with leases and market rent evidence. How it fits a legal theory stays with counsel.

Vacancy Claims Follow a Published Formula

The Assessor’s valuation already carries a market vacancy factor, so a vacancy claim has to go beyond it. Under the vacancy policy, a reduction applies when conditions outside the owner’s control keep a building from its intended use. The policy recognizes market, renovation, and casualty vacancy, and it limits any reduction to 24 months per event.

For market-related vacancy, the formula takes half of the weighted annual vacancy and subtracts the vacancy already in the valuation. Take 60% weighted vacancy with 10% already in the valuation. That is 30% less 10%, an additional 20% reduction to the building’s assessed value.

The documents matter as much as the math. The policy asks for a month-by-month vacancy affidavit, a twelve-month rent roll, proof the space was marketed, and utility bills. If the file can’t show those, the number won’t carry.

What Lenders Should Do With a Reassessed Value

Bankers see this from the other side. A reassessment can move the tax line in a borrower’s NOI long before any appeal is decided. The Assessor’s value is not a collateral value. It is a mass appraisal built for tax purposes.

So when a notice arrives, ask the borrower for the Assessor’s methodology report for the township. It shows how each PIN was reassessed. Set the income, vacancy, expense, and cap rate inputs next to the borrower’s rent roll and your own appraisal. If the borrower has filed an appeal, ask to see the filing and the income evidence behind it. Treat any hoped-for reduction as unrealized until a decision issues.

Put the Income Evidence and the Cap Rate on the Same Basis

Start early. Gather three years of income and expense statements, the current rent roll, and the leases. Ask your appraiser to state whether taxes sit in the NOI or in the cap rate. Have the market rate and the vacancy supported with evidence you can hand to the Board. Then confirm the township window, because they open on different dates and close on schedule.

PahRoo establishes value from the evidence. Whether a given fact pattern meets a legal standard stays with you and the Board.

Is Your Cap Rate Loaded or Unloaded?

Send us the rent roll and the Assessor’s notice. We will build the income case on one consistent basis. Your NOI and cap rate then hold together at the Board.

Build the Income Case

Frequently Asked Questions

How is commercial property valued for a Cook County tax appeal?

The Assessor values most commercial property with the income approach, applied through mass appraisal. It uses market rents, vacancy, expenses, and a market cap rate. In an appeal, an owner can present actual income records and an appraisal to support a different value. The Assessor defines fair market value as what a property could sell for between willing parties.

What income evidence does the Board of Review want?

Board of Review guidance for leased commercial property covers the rent roll and leases. It also lists three years of IRS Schedule E, photographs, and a vacancy affidavit where it applies. Owner-occupied property needs an appraisal completed in the past three years. Check the current filing rules before you submit, because requirements can change.

Do commercial tax appeals need an appraisal?

It depends on the property and the filing. Board of Review guidance asks for an appraisal on owner-occupied property, while leased property leans on income records. Illinois Property Tax Appeal Board rules list an appraisal as one form of proof of market value. A recent sale, comparable sales, and construction costs are others. Your attorney decides which evidence fits the case.

What cap rate does the Assessor use?

There is no single rate. The Assessor derives a market cap rate from market data, third-party sources, past appeals, and comparable sales. Starting in 2026 it adds a tax load to that rate. The loaded rate therefore runs higher than the market rate alone. The methodology report for your township shows what was applied to each property.

How does vacancy affect a commercial assessment?

The Assessor’s valuation already includes a market vacancy factor. A commercial vacancy reduction applies when conditions outside the owner’s control keep a building from its intended use. Any reduction is limited to 24 months per event. The owner documents the claim with a vacancy affidavit, a rent roll, proof of marketing, and utility bills.

Income Approach Appraisals for Cook County Appeal Files

PahRoo Appraisal and Consultancy prepares income approach appraisals from our Lincolnwood office. We work with attorneys, lenders, and property owners across Cook County. If you are still deciding whether to appeal, start with our overview of Cook County tax appeals. You can also read when a commercial real estate appraisal makes sense.

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Former church building on a residential block, a common subject of a special use property appraisal
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Commercial Appraisals
When There Are No Comps for a Mixed-Use or Special Use Building

What do you tell a client who asks what a former church is worth? Or a bowling alley, or a storefront with four apartments upstairs? A special use property appraisal starts where the usual shortcuts stop. There may be no recent sales of anything like it, and no rental market to borrow from. So the report has to show more of its reasoning, and counsel should know where to look.

By the end of this article, you’ll know:

  • What makes a property special use or mixed-use, and why comparable sales fall short.
  • How highest and best use and the cost approach carry the analysis.
  • Which value, interest, and use questions to settle before the engagement letter goes out.

Why a Special Use Property Appraisal Takes More Work

A special use property is a building designed around one purpose. Its layout, structure, or equipment fits that use and little else. Think of a house of worship, a school, a theater, a car wash, a gas station, or a bowling alley. Appraisal texts usually call it special purpose property, but the idea is the same.

The trouble starts with the market. Few buyers want a building they would have to gut, so these properties sell rarely. When one does sell, the price often reflects a conversion or a teardown. Because of that, the sale may say little about what the building is worth in its current use.

So the appraiser widens the search. Sales from other counties or other states may come in, along with older ones. Each needs more adjustment and more explanation. The income approach has limits too, because many of these buildings have no rental market to speak of. Our guide to the three approaches to value explains how each one works on ordinary commercial property.

Highest and Best Use Comes Before Any Number

Every appraisal rests on a use. Highest and best use is the use that passes four tests. It has to be legally permissible, physically possible, financially feasible, and maximally productive. On a special use building, that analysis can decide the whole assignment.

Take a closed church on a residential block. It may be worth the most to another congregation. Or a developer may pay more to convert it to housing, if zoning allows. Sometimes the land is worth more with the building gone. Those are three different values for the same parcel.

The first test is where your work and ours meet. Zoning, a special use permit, legal nonconforming status, deed restrictions, and easements all shape what a buyer can do. The appraiser reports what the analysis relied on. But if the legal status is in doubt, that call belongs to counsel, not to us. In that case the report should state the assumption plainly, so any reader knows what the value depends on.

Federal bank guidance takes the same view. Under the Interagency Appraisal and Evaluation Guidelines, market value should reflect the property’s actual physical condition, use, and zoning as of the effective date. If the highest and best use is redevelopment, demolition and site preparation costs also belong in the analysis.

Where the Cost Approach Earns Its Place

When sales and rents are thin, the cost approach often carries the most weight. It adds land value to the cost of building the improvements new, then subtracts depreciation. On a special use building, depreciation is the hard part.

Physical wear is easy enough to see, but functional obsolescence takes more judgment. A 600-seat sanctuary or a 40-lane bowling center may cost far more to build than the market would pay for it today. That gap has to come off the cost, and the report should say how the appraiser measured it.

Consider a hypothetical single-purpose building. Say the land is worth $600,000 and the improvements would cost $3,200,000 to replace. Physical depreciation of 35 percent takes off $1,120,000. Functional obsolescence then takes off another $480,000. So the improvements contribute $1,600,000, and the cost approach indicates $2,200,000.

In a dispute, that $480,000 line is the one the other side will test. The same goes for the land value, which still comes from sales. The interagency guidelines also expect the appraiser to explain any approach left out. If the report skips sales comparison, it should say why.

Mixed-Use Property Is Several Buildings in One

Mixed-use property has the opposite problem. There is plenty of market evidence, but it belongs to different markets. A building with retail at grade and apartments above answers to retail rents and apartment rents at once. Each part has its own vacancy pattern, expense load, and lease structure.

So the income approach gets built one component at a time. The appraiser estimates net operating income for the retail and for the apartments, then asks who buys the building as a whole. The cap rate should come from sales of buildings with a similar mix. If it can’t, the report should explain how the appraiser blended the rate.

Leases need a close read as well. The interagency guidelines note that a long lease below market rent can make the leased fee worth less than the fee simple. For that reason, the report must state which interest it values.

In Cook County, the mix also drives the tax line. Under the Assessor’s class definitions, revised in December 2024, a mixed-use building with six or fewer units and under 20,000 square feet is Class 2-12. That class sits at a 10 percent level of assessment, while commercial classes sit at 25 percent. Larger buildings can end up split between the two. The Assessor makes that call, but the appraisal still has to model the taxes a buyer would expect.

The Real Estate Is Not the Business

Some special use properties sell as operating businesses. A car wash or a hotel changes hands with its equipment and its customer base. That total is going concern value, and it is not the value of the real estate.

The distinction matters for lending. The same federal guidelines say going concern value, value in use, and value to a specific user may not stand in for market value in a federally related transaction. An appraisal can report them, but only as separate opinions with clear labels.

SBA lending went a step further. In a 2015 notice, SBA said going concern appraisals of special purpose property must allocate separate values to land, building, equipment, and intangible assets. SBA has revised its procedures since then, so confirm the current rule with the lender.

Still, the allocation question comes up in purchase agreements, collateral descriptions, and ownership disputes too. How those pieces get characterized legally is your call. Our job is to support each number.

What Owners and Investors Should Hand the Appraiser

If you own or are buying one of these buildings, the file you hand over shapes the report. So pull these together first.

  • Every commercial lease, plus a rent roll that separates commercial space from apartments.
  • Three years of income and expenses, with shared costs such as taxes and insurance split by component where you can.
  • The certificate of occupancy and any special use permit, variance, or zoning letter.
  • For a single-purpose building, the construction costs or recent contractor bids.
  • A list showing which equipment stays with the building and which belongs to the business.

If your own company occupies the building, put a written lease in place at a rent you can support. Then the appraiser has something to analyze besides your word. Also, before you buy a special use building, price the exit. Ask a contractor what conversion would cost, because the next buyer will ask the same thing.

Settle Four Questions Before the Engagement Letter Goes Out

Most trouble with these appraisals starts before anyone hires the appraiser. So settle four points up front and put them in the engagement letter.

  • Start with the value, whether market value of the real estate, value in use, or going concern.
  • Then name the interest, fee simple or leased fee.
  • Next comes the use, as the property stands today or under a stated zoning or conversion assumption.
  • Finally, fix the date, either today or a past date the matter turns on.

A special use property appraisal that answers those four on page one is far easier to defend. It is also easier to compare when the other side produces its own report.

Drafting Around a Hard-to-Value Building?

PahRoo lays out the highest and best use, the approaches, and any allocation step by step, so counsel can follow how the value was reached.

Discuss Your Commercial Assignment

Frequently Asked Questions

What counts as special use property?

A property built for one purpose, with a design or layout that suits that use and little else. Common examples are houses of worship, schools, theaters, car washes, gas stations, and bowling alleys. Appraisers often call it special purpose property. Because few buyers want such a building as it stands, sales are scarce.

How do you appraise a church or school?

Usually with the cost approach in the lead. The appraiser values the land from sales, estimates the cost to build the improvements new, then subtracts physical wear and functional obsolescence. Sales of similar buildings, often from a wider area, serve as a check. Highest and best use analysis comes first, since conversion or redevelopment may be worth more than continued use.

How is mixed-use property valued?

Mostly through the income approach, built one component at a time. Retail, office, and apartment space each get their own market rent, vacancy, and expense analysis. The appraiser then applies a cap rate supported by sales of buildings with a similar mix, and checks the result against those sales directly.

What is a going concern in appraisal?

It is the value of an operating business together with its real estate, equipment, and intangible assets. Federal bank guidance says going concern value may not be used as market value for a federally related transaction, though an appraisal may report it as a separate, clearly identified opinion.

Why are special use properties hard to value?

They rarely sell, and many have no rental market, so two of the three approaches have little data. The cost approach fills the gap, but it depends on a judgment about how much value the specialized design has lost. That judgment needs clear support in the report.

Appraisals for Buildings That Don’t Fit a Template

Odd buildings are regular work at PahRoo Appraisal & Consultancy. Our MAI and SRA designated team serves Chicago and Cook County, Dallas-Fort Worth, Philadelphia, Phoenix, and Naples. See our commercial appraisal services for the property types we cover, mixed-use and special purpose assignments included. Or start with our Chicago appraisal services page for local scope questions.


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Divorce Appraisal
When Two Appraisals of the Same House Disagree in Court

Two appraisers walk the same Park Ridge house a few weeks apart. One report says $985,000 and the other says $840,000. It’s a hypothetical, but family law attorneys will recognize it. The competing appraisals divorce counsel bring to trial rarely disagree about everything. Usually the $145,000 sits in three or four specific choices, and each one can be found. So before anyone attacks the other side’s number, it pays to find out where the gap lives.

By the end of this article, you’ll know:

  • The five places two reports on the same house usually split
  • A step-by-step way to trace the gap to its sources before the deposition
  • What a rebuttal review covers, and what the CPA should do with two values

Why Competing Appraisals Divorce Courts See Rarely Match

Two competent appraisers can reach different values without either one being careless. An appraisal is an opinion built from data, and the choices stack up. In my experience the split shows up in five places.

The first is the date. Under 750 ILCS 5/503, the court uses fair market value as of the trial date, or another date the parties agree to or the court orders. If one report carries a March date and the other an October date, they measure two different markets. Our article on the date of value in a divorce appraisal covers how that date gets set.

The second is the house itself. One appraiser measured 3,150 square feet, and the other pulled 2,900 from the assessor’s record. One saw the finished basement, while the other never got past the kitchen because a spouse cut the visit short. Measurement method matters too. Fannie Mae has required the ANSI measuring standard on its loans since April 2022, but a divorce assignment isn’t a Fannie Mae loan. So ask each appraiser how the living area was measured.

The third is comparable selection, and it usually carries the most dollars. Two sales from a stronger school boundary or a newer subdivision will pull a value up. Leaving out the one sale that didn’t fit will do the same. The fourth is the adjustments: what each appraiser added or subtracted for size, condition, and location, and what market evidence backs each figure. The fifth is reconciliation, meaning which sales got the most weight at the end and why.

Trace the Gap Before You Attack the Number

Put the two reports side by side and work through them in order. It’s the same sequence I follow when counsel sends me an opposing report.

  1. Match the assignment terms. Compare the effective date, the definition of value, and the intended use on the first pages.
  2. Match the property. Compare living area, room count, lot size, condition rating, and what each appraiser inspected.
  3. Compare the sales. List every comparable in both reports, then mark the ones only one appraiser used.
  4. Compare adjustments on shared sales. If both used the same sale and adjusted it differently, that difference is pure judgment.
  5. Read both reconciliations. See which sales each appraiser leaned on at the end.
  6. Put a dollar figure on each difference. Then you know which fights matter.

Here is how that might run on the Park Ridge example. The 250 square feet of disputed living area, at a hypothetical $120 per square foot adjustment, accounts for $30,000. A seven-month difference in effective dates might explain $25,000. One appraiser rated the kitchen as updated and the other as average, worth perhaps $40,000. Then the last $50,000 comes from two sales in a stronger pocket that only one report used. Together those four items make up the full $145,000.

Now the dispute looks different. Two of the four items are facts. A tape measure settles the square footage, and the court’s order settles the date. Only the condition rating and the comparable selection are judgment calls, and they total $90,000. In practice, that is the real fight.

What the Judge Has to Work With

Section 503 requires the court to make specific factual findings on values. When the experts disagree, the judge resolves it as the trier of fact. Illinois appellate courts have long said that conflicts in valuation testimony are for the trial court. One 1998 decision added that a valuation within the range the experts testified to ordinarily will not be disturbed on appeal. How that applies to your case is counsel’s call. But from where I sit, it means the judge doesn’t have to adopt one report whole. A number in between is possible too.

So credibility is the contest. A judge reading two reports looks for the appraiser who verified the sales, supported each adjustment with market evidence, and inspected the whole property. Then cross-examination tests whether the explanation holds. We covered that test in what makes an appraisal defensible on the witness stand.

The statute also offers a third route. Under 503(l), the court may seek advice from its own financial experts or other professionals. That advice must be in writing, and counsel may examine the professional as a witness. So a third opinion can enter the case even if neither side orders one.

What a Rebuttal Appraisal Review Does

A rebuttal is usually an appraisal review. USPAP defines appraisal review as developing an opinion about the quality of another appraiser’s work, and Standards 3 and 4 govern it. The Appraisal Institute guidance on reviews makes two points attorneys should know. A reviewer evaluates the work, not the person. And a reviewer may or may not develop a separate opinion of value.

That second point shapes the engagement. A review without a value tells the court where the opposing report lacks support. A review with a value also gives the court another number, and the reviewer then has to support it like any appraisal. Sometimes the first kind is enough, because your retained appraiser’s report already supplies the value. So decide which one you need before you order it.

Timing matters as well. A reviewer needs the full opposing report, and ideally the workfile, well before the deposition. If you haven’t picked the person yet, our list of questions to ask an expert witness appraiser applies to reviewers too. One caution, though. The review should stay in the appraiser’s lane. Opinions about the other expert’s motives belong to counsel.

For the CPA Carrying Two Values Into the Schedules

Accountants often get both reports before anyone resolves the dispute, and the marital balance sheet still has to get built. Three habits keep your work clean.

First, don’t average the two numbers. An average has no effective date, no comparables, and no appraiser to defend it. Instead, run the balance sheet twice and show both. On the Park Ridge example, a $145,000 gap with an equal split of equity moves the equalizing payment by $72,500. That figure tells counsel what the fight is worth.

Second, check each report’s effective date against your own schedules. If the business valuation and the account balances are as of one date and an appraisal is as of another, say so in a footnote. Third, ask counsel for the gap analysis described above. Once you know $55,000 of the difference is date and square footage, you can model the likely range instead of the extremes.

Narrow the Fight to What Is Actually in Dispute

Most dueling appraisals get closer once someone does the tracing. So do it early. Stipulate to the effective date and the living area if you can, because those are facts. Then have a qualified reviewer put the remaining differences in writing, with a dollar figure on each. If the gap survives that, you’ll go into the deposition knowing which two or three questions matter. If it doesn’t, you may have found the settlement range instead. Our guide to disputed property value in an Illinois divorce lists the records to pull first.

Opposing Appraisal Just Landed on Your Desk?

Send us both reports. PahRoo prepares appraisal reviews under USPAP Standards 3 and 4 that show where the two values split and what each difference is worth. Michael Hobbs, MAI, SRA, signs our Illinois litigation work and testifies to it.

Request an Appraisal Review

Frequently Asked Questions

What happens when two appraisals disagree in court?

The judge decides value as the trier of fact. Each appraiser testifies and faces cross-examination, and the court weighs which opinion has better support. Under 750 ILCS 5/503, an Illinois court must make specific findings on the value of the property it divides.

Why do two appraisals of the same house differ so much?

Usually for a handful of traceable reasons: different effective dates, different measurements or condition ratings, different comparable sales, different adjustments, and different weight in the final reconciliation. Putting a dollar figure on each one shows which differences are facts and which are judgment.

How does a judge decide between competing appraisals?

By credibility and support. Judges look at whether the appraiser inspected the property, verified the sales, backed each adjustment with market evidence, and held up under cross-examination. Illinois appellate decisions say conflicts in valuation testimony are for the trial court to resolve.

What is a rebuttal appraisal?

Most often it is an appraisal review: a second appraiser’s written opinion about the quality of the other side’s report, prepared under USPAP Standards 3 and 4. The reviewer may stop there or may also develop a separate opinion of value.

Can you get a third appraisal?

Yes. Either side can retain another appraiser, subject to the court’s disclosure deadlines. Under 750 ILCS 5/503(l), an Illinois court may also seek written advice from its own financial experts or other professionals. Whether a third opinion helps is a strategy question for counsel.

Appraisal Review and Testimony for Contested Divorce Cases

When a second report turns a valuation into a dispute, family law attorneys and forensic accountants call PahRoo Appraisal & Consultancy. From our Lincolnwood office we prepare divorce appraisals and appraisal reviews across Chicago and Cook County, and the firm also works in Dallas-Fort Worth, Philadelphia, Phoenix, and Naples. Michael Hobbs, MAI, SRA, founded the firm and is available for deposition and trial in Cook County. See our residential appraisal services, or contact us with both reports and the disclosure deadline.

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Executor reviewing estate paperwork and house keys before ordering a date of death appraisal
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Estate Planning
What Was the House Worth the Day They Died?

A date of death appraisal is the number an estate rests on. It is also, usually, the last thing anyone orders. Consider a hypothetical. Your father died in March, and the will named you executor. The house in Park Ridge is the largest thing he owned. Now the attorney has asked one question: what was it worth on the day he died? Not what it would list for today, and not what the assessor carries it at. So here is what that appraisal establishes and where it fits in settling the estate. Then, what to put in writing before the appraiser starts.

By the end of this article, you’ll know:

  • What the date-of-death value is used for, and why an assessment cannot stand in for it.
  • Where the appraisal fits in the settlement timeline, from the inventory to the returns to the distribution.
  • What the executor and the estate attorney should settle with the appraiser before the work begins.

What a Date of Death Appraisal Establishes

The report fixes one figure: the fair market value of the property on the day the owner died. Federal estate tax regulations, at 26 CFR 20.2031-1, define that value as the price a willing buyer and a willing seller would agree on, neither under pressure. Both know the relevant facts. A forced-sale price does not qualify, though. Nor does the county’s assessed value, unless that number happens to equal fair market value. In Cook County it rarely does. Assessments come out of a mass appraisal model, not a look at one house.

That single figure then does several jobs. It is the value the executor reports if the estate owes a tax return. It also becomes the tax basis the heirs carry when they eventually sell, under the IRS rules on inherited property. And when one heir keeps the house while the others take cash, it is the number the buyout starts from. One report, prepared once, serves every one of those uses.

Because the effective date sits in the past, the assignment is retrospective by definition. The appraiser inspects the property now, then values it as it stood on the date of death. Only sales a buyer could have seen at the time count. USPAP, the standards published by The Appraisal Foundation, requires the report to state that effective date and hold the analysis to it. Our article on appraisals for inherited property walks through how that reconstruction works. This piece stays on the process around it instead.

Where the Appraisal Fits in Estate Settlement

For an Illinois estate that goes through probate, the sequence runs like this. Whether a given estate needs probate at all, or passes through a trust instead, is a question for the family’s attorney.

  • Letters issue. Once the court appoints the representative, a clock starts. Under section 14-1 of the Illinois Probate Act, the representative files an inventory within 60 days. It has to describe the real estate, its improvements, and any mortgage or lien against it. In Cook County, those cases run through the Probate Division at the Daley Center.
  • Nine months. Both the federal and the Illinois estate tax returns come due nine months after death. The federal return, Form 706, only applies to a 2026 death above $15,000,000. That figure counts the gross estate plus adjusted taxable gifts, according to the IRS instructions. Illinois, though, sets a lower bar. The Illinois Attorney General puts the state threshold at $4,000,000. The Illinois return, Form 700, goes to the Attorney General’s office with a Form 706 and the appraisals attached. Whether an estate below the federal threshold still prepares a 706 for that purpose is a question for counsel. A paid-off house, a retirement account, and a life insurance policy can cross that line.
  • Distribution. Then the estate accounts to the heirs and distributes. If one sibling buys out the others, the date-of-death value anchors the price. If the house sells, the closing price answers to it.
  • The later sale. Years on, an heir sells and the basis question comes back. If the estate filed Form 706, it may also have issued Form 8971. That form ties each heir’s basis to the estate tax value.

No Estate Tax Due? The Value Still Comes First

Notice which step needs the value first. Even if no estate tax will be due, the basis and the distribution still depend on it. So the appraisal belongs at the front of the timeline, ordered when the letters issue. Waiting for a buyer’s offer puts it in the wrong place.

Alternate Valuation and Why the Date Can Move

An executor who files Form 706 can elect to value the estate as of six months after death instead. The IRS instructions set the conditions. First, the election has to lower both the gross estate and the tax. It applies to everything in the estate, not just the house. Property that sells or passes to heirs inside those six months takes its value on the day it left the estate. And the election, once made, is final. Illinois allows the same election on Form 700 for estates that are taxable in Illinois but not federally.

Consider a hypothetical Wilmette house worth $1,400,000 on the date of death in a softening market. Six months later, comparable sales might support $1,330,000, a drop of $70,000, or about 5 percent. If the rest of the estate also declined, counsel might weigh the election. But the lower value becomes the heirs’ basis too. So a smaller estate tax bill now can mean a larger capital gain later. That trade-off belongs to the attorney and the CPA. The appraiser’s job is to supply both numbers. If the election is even a possibility, say so before counsel writes the engagement letter. Then the assignment carries two effective dates from the start.

What the Appraiser Needs From the Executor

In practice, a retrospective assignment lives or dies on what the executor can document. Four things speed the work and make the report easier to defend.

First, the date. The death certificate sets the effective date, so send a copy at engagement. Second, condition on that date. Photos from the funeral week, the last listing, and repair invoices all help. If the basement flooded in June after a March death, the appraisal has to describe the dry basement. Third, how the decedent held title. A house owned outright is one assignment; a half interest held with a sibling is a different scope. So say which before the appraiser quotes a fee. Fourth, who will rely on the report. Naming the attorney and the CPA as intended users lets everyone work from one document without a second engagement. Our residential appraisal team asks for all four before scheduling the inspection.

Then keep the report. The heirs may not sell for a decade, and the basis question will be waiting when they do.

For Estate Attorneys: Scoping the Engagement

Most weak estate appraisals trace back to an engagement letter that never named the assignment. Four lines fix that.

State the effective date, and add the six-month alternate date if the election is live. Name the intended use as estate tax reporting, basis determination, and probate accounting. List the executor, counsel, and the CPA as intended users. Specify the definition of value as fair market value under 26 CFR 20.2031-1(b), quoted in the report. A lender’s market value definition carried over from a refinance form is the wrong one. And scope each parcel separately, with any fractional interest identified up front.

Why it matters on the return: the Form 706 instructions carry a 20 percent penalty when a reported value is 65 percent or less of the actual value. The Illinois return, meanwhile, goes to the Attorney General’s estate tax section with the appraisals attached. A report that follows the regulation’s definition answers the reviewer’s first question before anyone asks it. A lender form, by contrast, leaves it open.

Order the Appraisal When the Letters Issue, Not When the House Sells

The sequence is simple once the timeline is visible. Letters issue, and the executor orders the appraisal. Then the inventory goes in, the returns go out on time, and the distribution follows a number everyone has seen. Families who reverse it end up backing into a value after the sale. That is harder to defend and costlier to fix. So get the date-of-death value first. Everything else in the estate settles around it.

Settling an Estate With a House in It?

PahRoo prepares date-of-death and alternate-valuation appraisals for executors, estate attorneys, and CPAs across Chicago and Cook County, Dallas-Fort Worth, Philadelphia, Phoenix, and Naples.

Order a Date-of-Death Appraisal

Frequently Asked Questions

What is a date-of-death appraisal?

It is a real estate appraisal with an effective date equal to the day the owner died. It states the property’s fair market value on that date, using evidence available at the time, even if the report comes later. Executors use it for the returns and the distribution, and heirs use it as their tax basis.

How do you value a house for probate?

A licensed appraiser inspects the property, documents its condition as of the date of death, and analyzes comparable sales from around that date. The report ties a fair market value to that effective date and explains the data cutoff. An assessor’s figure or an online estimate is not a substitute.

Who orders a date-of-death appraisal?

Usually the executor or administrator, often at the attorney’s request. A trustee orders it when the property sits in a trust, and a CPA may ask for it for the estate return or the heir’s basis. Name the attorney and the CPA as intended users so all can rely on one report.

How long after death can you get an appraisal?

There is no fixed deadline, but the estate needs the number early. Illinois probate inventories are due 60 days after letters issue, and estate tax returns nine months after death. Appraisers routinely prepare retrospective reports months or years later, though condition documentation gets harder with time.

What is the alternate valuation date?

It is the date six months after death that a Form 706 executor can elect instead. The election must lower both the gross estate and the tax, covers every asset, and is final once made. Property that sells inside the six months takes its value on the sale date. If the election is possible, tell the appraiser at engagement.

Retrospective Estate Work Across Five Markets

PahRoo Appraisal & Consultancy prepares date-of-death, alternate-valuation, and buyout appraisals for executors, trustees, estate attorneys, and CPAs in Chicago and Cook County, Dallas-Fort Worth, Philadelphia, Phoenix, and Naples. The same retrospective discipline runs our January 1 valuations for property tax appeals. See the full list of appraisal services, or contact the team with the date of death and the property address.

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PhiladelphiaProperty Tax
Philadelphia Assessment Appeal Appraisal Before October 5

The Philadelphia assessment appeal appraisal question comes up every September for one reason. Monday, October 5, 2026 is the last day to file a tax year 2027 market value appeal with the Board of Revision of Taxes. The First Level Review window at the Office of Property Assessment closed on September 1. For most owners, the formal BRT appeal is the only door still open.

Here is the part that trips people up. October 5 is a filing deadline, not an appraisal deadline. Under the BRT rules, most supporting documents can be filed later. That sounds like breathing room. In practice it is a trap for anyone who files first and thinks about evidence second.

By the end of this article, you’ll know:

  • What the October 5 deadline covers, and the three narrow exceptions to it
  • What the Board expects from an appraisal report and from the owner, by property type
  • Why ordering the appraisal before you file is the safer sequence, and what to do this week

What the first Monday of October actually covers

The rule is simple. A market value appeal must be filed with the BRT no later than the first Monday of October in the year before the tax year being appealed. For 2027 values, that is October 5, 2026.

There are three narrow exceptions. A new owner who takes title after the deadline and before December 31 gets 30 days from the deed. An owner whose assessment notice is dated after the deadline gets 30 days from the notice. A buyer under an agreement of sale signed in that same window gets 30 days from signing. Outside those, a late filing needs a nunc pro tunc petition. The Board can consider one, but it is a request, not a right.

You can file by mail, in person at 601 Walnut Street, Suite 325 East, or by emailing the PDF form to appealinquiry@phila.gov. Email gives you a timestamp. Mail does not.

Once the appeal is in, the Board sends a hearing notice roughly 45 to 90 days ahead of the hearing date. The property documents the rules require can be attached to the application or filed within 45 days of that hearing date. An appraisal report from an expert witness rides on the same clock.

Why the appraisal should still be done before you file

So the rules give you time to get the Philadelphia assessment appeal appraisal done later. Four reasons not to take it.

You are stating a position. A BRT appeal has to prove one of three things: the value is too high or too low, it is not uniform with similar properties nearby, or the recorded characteristics are substantially wrong. You only know which argument you have once someone has valued the property against the market. File on a hunch and hope the appraisal lands where you need it, and you get the appeal that quietly gets withdrawn in December. The Board sees the same attorneys every year. It remembers.

A waived hearing compresses the clock. If the owner waives the oral hearing, any additional evidence is due within 20 days of filing. The appraisal still has to meet the expert report rules. Twenty days in October is not enough time to start a narrative report from zero.

The report the Board wants is not a quick one. Rule 7 spells it out. A full narrative appraisal report prepared in conformity with USPAP. Three hard copies and one electronic copy. A summary of the appraiser’s qualifications. Proof of compliance with Pennsylvania real estate licensing. A written statement that the appraiser has no financial interest in the property and that the fee is not contingent on the outcome. The rules also say the property information should be contained in a report prepared by an appraiser certified by the Commonwealth of Pennsylvania. Narrative reports take weeks. Rule 8 adds the consequence: failure to produce documents or to strictly comply can be grounds for denial.

Your appraiser is already booked. Every property tax attorney in the city is working the same date. Inspections need scheduling. Rent rolls and two years of income and expense statements have to come from the client before the report can be finished. Clients are slow in September. Appraisers are not the bottleneck. The paperwork behind them is.

What the Board wants to see, by property type

Rule 6 lists the documents by category. The short version:

  • Owner-occupied home. Photos of the front, rear, sides, and street view. Anything else the owner wants considered. An appraisal is not required here, but it changes the conversation from opinion to evidence.
  • Owner-occupied commercial or industrial. Two years of operating expenses with explanations, the same photo set, and a plan locating every building on the site.
  • Leased property, four or fewer tenants. Executed leases with every amendment and rider, two years of income and expense statements, photos. Industrial adds the building plan and site layout.
  • Five or more tenants. A typical residential lease plus all commercial leases, a current rent roll with square footage, lease terms, rents, and other revenue, two years of income and expense statements, photos, and a plot plan.
  • Office buildings and shopping centers. Their own lists, built around the rent roll, pass-throughs, and two years of income and expense.

For every category above the owner-occupied home, the rules repeat the same line: it is suggested this information be contained in an appraisal report prepared by a Pennsylvania certified appraiser. Read that as a strong hint about how the Board prefers to receive it.

If you own or advise on an income property, the useful move this week is boring. Pull the last two years of income and expense statements, the current rent roll, and every lease with its amendments. Send them to the attorney and the appraiser at the same time. The Board requires them regardless, and the appraiser cannot finish without them.

What an over-assessment costs

The Real Estate Tax rate is 1.3998%, split between the City at 0.6159% and the School District at 0.7839%. It has not changed since 2016 and stays the same for 2027. So every $100,000 of over-assessment costs roughly $1,400 a year. On a $1,000,000 gap, that is about $14,000 a year, every year, until someone fixes it.

The 2027 values came out of a citywide revaluation. OPA mailed notices starting June 29 and says its computer assisted mass appraisal system reviewed more than 580,000 properties. Mass appraisal is good at the average property. It is not built to see the vacancy on the second floor, the lease that rolls in March, or the roof that failed in February. That gap is where a property-specific appraisal earns its fee.

A working timeline from here

Between now and October 5, the sequence that works looks like this. Order the appraisal now, not after filing. Get the client’s documents moving the same day. File the application before October 5, by email so there is proof. Calendar the 20-day window if the hearing is waived and the 45-day window if it is not. Decide with counsel whether a hearing helps or hurts on this particular file.

One line we hold. Whether to file, and on which ground, is the attorney’s call. What the property is worth, and whether the assessment holds up against the market, is the appraiser’s job. We stay on our side of that line, and we put the support in the report so you do not have to argue it from memory.

Have a Philadelphia File Heading to the Board?

PahRoo prepares Philadelphia assessment appeal appraisals with the property-type documents the Board lists and a report written to its expert witness rules.

Value It Before October 5

Frequently Asked Questions

When is the Philadelphia assessment appeal deadline for tax year 2027?

Monday, October 5, 2026. Appeals go to the Board of Revision of Taxes by mail, in person at 601 Walnut Street, Suite 325 East, or by emailing the PDF form to appealinquiry@phila.gov. The rule is the first Monday of October in the year before the tax year being appealed.

Does the Philadelphia assessment appeal appraisal have to be attached to the application?

Not always. Required documents can be attached to the application or filed within 45 days of the hearing date. If the oral hearing is waived, additional evidence is due within 20 days of filing. Either way, an appraisal used as expert evidence must meet the BRT’s expert report rules, so ordering it before you file is the safer sequence.

Can I still request a First Level Review with OPA?

The First Level Review deadline for 2027 values was September 1, 2026, and it has passed. The BRT appeal does not depend on it. You can file with the BRT whether or not you requested a First Level Review.

What does the BRT require from an appraisal report?

A full narrative appraisal report prepared in conformity with USPAP, three hard copies and one electronic copy, a summary of the appraiser’s qualifications, proof of compliance with Pennsylvania real estate licensing, and a statement on financial interest confirming the fee is not contingent on the outcome. The rules suggest the report come from an appraiser certified by the Commonwealth of Pennsylvania.

What happens if I miss October 5?

Three exceptions give 30 days: a new owner from the deed date, an assessment notice dated after the deadline, or an agreement of sale signed after the deadline and before December 31. Outside those, you would need a nunc pro tunc petition, which the Board may or may not grant. Otherwise the next window is October 2027 for tax year 2028.

Appraisal Support for Philadelphia Assessment Appeals

Philadelphia is one of the five markets PahRoo Appraisal & Consultancy serves, alongside Chicago and Cook County, Dallas-Fort Worth, Phoenix, and Naples, and property tax appeal work is part of that commitment. Our MAI and SRA designated team prepares appraisals for owners, attorneys, and CPAs across our appraisal service lines, and our Philadelphia page covers the neighborhoods and property types we handle. Michael Hobbs, MAI, SRA, signs every report and is available for testimony. To discuss a Philadelphia file before the filing date, contact our team.

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Brick courtyard apartment building in Chicago, the subject of a multifamily appraisal
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Commercial Appraisals
The Rent Roll Is Where Apartment Value Lives

A multifamily appraisal lands on a lender’s desk with one number on the cover and forty pages behind it. But those pages matter more than the number. An apartment building sells for its rents, so the appraisal stands or falls on the rent roll, the expenses, and the cap rate. If you underwrite apartment loans, those are the pages to read first.

By the end of this article, you’ll know:

  • How a multifamily appraisal turns a rent roll into value.
  • Which rent roll and expense details deserve a second look in the report.
  • What owners can prepare so a refinance appraisal holds up.

How a Multifamily Appraisal Values an Apartment Building

Apartment buildings trade on income, so the income approach carries the most weight. The appraiser estimates what the building should earn in a typical year. Then the cost to run it comes off, and the result converts into value. The sales comparison approach checks that answer against recent apartment sales, usually on a price per unit basis. The cost approach rarely drives the number on an existing building, though it can matter on new construction.

Unit count changes the paperwork too. Under the OCC’s appraisal rule for national banks, a transaction not secured by a single 1-to-4 family residential property counts as a commercial real estate transaction. So a five-unit building falls on the commercial side. The same rule calls for a State certified appraiser on federally related commercial transactions over $500,000. Two- to four-unit buildings still go on the residential Fannie Mae Form 1025, where the income approach is a simple gross rent multiplier. At five units and up, the work usually moves to a full commercial income analysis instead.

The Rent Roll Comes First

The rent roll lists every unit in the building and what each one pays. A usable one shows unit number, unit type, tenant, lease start and end, contract rent, and any concession. It should also flag vacant units, down units, and units set aside for staff. The appraiser checks it against the leases and the trailing twelve months of operating statements. In many assignments, bank deposits get checked too.

Then contract rents get compared to market rents. If in-place rents sit well below market, the building has upside a buyer will pay for, but only with time and turnover. If rents sit above market, that extra income may not survive the next lease cycle. Concessions matter here as well. One free month on a 12-month lease cuts the effective rent by about 8.3 percent, and a rent roll showing only face rent hides that.

From Occupancy to Net Operating Income

Occupancy comes in two versions. Physical occupancy simply counts occupied units. Economic occupancy compares the rent actually collected against the rent the building could earn. A building can be 96 percent physically occupied and still collect far less because of concessions, delinquency, or below-market leases. So the appraiser applies a vacancy and collection loss based on the market and the building’s history, not just today’s snapshot.

Operating expenses get the same scrutiny. Property taxes, insurance, owner-paid utilities, repairs, payroll, management, and replacement reserves all come out before net operating income. Then appraisers usually test each line per unit against comparable buildings. An owner who self-manages still carries a market management fee in the analysis, because a buyer would pay one. We walked through the full build in our guide to net operating income in commercial real estate.

Cap Rate, Price Per Unit, and the Gross Rent Multiplier

Direct capitalization divides one year of stabilized NOI by a market cap rate. That rate should come from confirmed sales of similar apartment buildings, not a national survey. Our explainer on the cap rate in commercial real estate covers where those rates come from. For a building in lease-up or mid-renovation, the appraiser may run a discounted cash flow instead, as our income approach guide explains.

Consider a hypothetical 24-unit building averaging $1,650 a month per unit. That comes to $475,200 a year in potential rent. Add $14,400 in parking and laundry income, then take 5 percent for vacancy and collection loss. Effective gross income lands at $465,120. Subtract $6,800 per unit in expenses, including reserves, and NOI comes to $301,920. At a 6.75 percent cap rate, the indicated value is about $4,470,000, or roughly $186,000 per unit.

Now move the cap rate to 7.25 percent. Same building, same rents, and the value drops to about $4,160,000. Half a point cost more than $300,000. That is why the cap rate support deserves as much attention as the rent roll.

The gross rent multiplier is the quick check. It divides price by gross rent, so it skips expenses entirely. Here, $4,470,000 over $475,200 in annual rent is about 9.4. If similar buildings nearby traded closer to 8 times rent, the appraiser has some explaining to do.

What Lenders Should Check Before Relying on the Number

A lender does not need to redo the appraisal. But a handful of checks catch most problems.

  • Rent roll date. It should sit close to the effective date, and the unit count should match the building.
  • Contract versus market rent. The report should show both and say which one drives the income.
  • Concessions and delinquency. Look for the adjustment, not just the face rents.
  • Expense support. Per-unit expense comparables, a market management fee, and reserves.
  • Cap rate support. Confirmed apartment sales in the same submarket, with the income extracted for each.
  • As is versus as stabilized. If the report gives both, know which one your loan depends on.

The OCC rule also expects appraisals to analyze and report deductions for partially leased buildings and non-market lease terms. That applies directly to a building mid-turnover or full of below-market leases. If the report skips it, ask why.

Where the Apartment Market Sits Right Now

Market data sets the backdrop for those assumptions. CBRE’s Q2 2026 multifamily figures put national vacancy at 4.3 percent, with average rent at $2,257 a month. Net absorption also beat new completions for a second straight quarter. In its release, CBRE said the Midwest led the country in annual rent growth at 2 percent.

Chicago looks tighter than most. Cushman & Wakefield’s Chicago MarketBeat reported 94.9 percent occupancy in Q2 2026, above the 10-year average of 93.8 percent. Effective rents rose 3.2 percent year over year. Still, a metro average does not appraise a 24-unit walk-up in Rogers Park. Instead, the submarket, the building’s condition, and its actual leases decide that.

For Owners: Get the File Ready Before the Appraiser Calls

If you own the building and a refinance is coming, most appraisal delays trace back to missing paperwork. So pull these together before the lender orders the report.

  • A current, dated rent roll with concessions and vacant or down units marked.
  • The trailing 12 months of income and expenses, plus the two prior calendar years.
  • Copies of the leases, or at least a sample, plus any commercial leases in the building.
  • Recent tax bills, the insurance declarations page, and the utility bills you pay.
  • A dated list of capital work, such as roofs, boilers, and unit renovations, with what each cost.

Then reconcile the rent roll to your bank deposits yourself. If they don’t match, the appraiser will find it, and the explanation takes longer later than now. Don’t annualize your best month either. Appraisers work from the trailing twelve months and the market, so an optimistic pro forma won’t carry the value. A clean file won’t raise the number. Still, it keeps an appraiser from discounting the number for uncertainty.

Underwrite the Rent Roll, Not the Offering Memo

An offering memo shows the building at its best. A credible multifamily appraisal shows it the way a typical buyer would see it, with market rents, real expenses, and a cap rate taken from actual sales. So read the rent roll analysis before the value on the cover. If the income holds up there, the number usually does too.

Underwriting an Apartment Loan This Quarter?

PahRoo appraises apartment buildings from the rent roll up, with market rent, expense, and cap rate support your credit team can check line by line.

Request a Multifamily Appraisal Quote

Frequently Asked Questions

How are apartment buildings appraised?

Mainly through the income approach. The appraiser analyzes the rent roll and operating statements, estimates market rent, vacancy, and expenses, and converts net operating income into value with a cap rate drawn from comparable sales. Price per unit and gross rent multiplier comparisons from recent apartment sales serve as a check.

What is a rent roll?

A unit-by-unit list of a building’s tenants and rents. It typically shows unit number and type, tenant, lease start and end dates, contract rent, concessions, and which units are vacant. Appraisers compare it against the leases and operating statements before relying on it.

How does NOI work for multifamily?

Net operating income is effective gross income minus operating expenses. For an apartment building, that means potential rent plus other income such as parking or laundry, less vacancy and collection loss, less taxes, insurance, owner-paid utilities, repairs, payroll, management, and reserves. Debt service is not deducted.

What is a gross rent multiplier?

The ratio of a property’s sale price to its gross rent. Fannie Mae’s Form 1025 for two- to four-unit properties multiplies gross monthly rent by a GRM to indicate value. For larger apartment buildings it works mainly as a quick check on the full income analysis, since it ignores expenses.

How many units make a property commercial?

Under federal bank appraisal rules, a loan secured by anything other than a single one-to-four family residential property counts as a commercial real estate transaction, so five units and up falls on the commercial side. Two- to four-unit properties usually go on residential appraisal forms. Individual lenders may draw their own lines for specific loan programs.

Multifamily Valuation for Lenders and Owners

Every apartment assignment at PahRoo Appraisal & Consultancy starts with the rent roll, across Chicago and Cook County, Dallas-Fort Worth, Philadelphia, Phoenix, and Naples. Our commercial appraisal services page lists the property types we cover. For local scope and timing questions, start with our Chicago appraisal services page.

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