773 388 0003

Tag: inherited property

  1. Homepage
  2. inherited property
Request a quote

Our blog

Latest news
& events

Appraiser filling up an appraial report of a Chicago brick home during a home appraisal
21 Views
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.

Read Now
Executor reviewing estate paperwork and house keys before ordering a date of death appraisal
50 Views
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.

Read Now
Adult daughter in the kitchen of an inherited Chicago home before ordering an appraisal for inherited property
83 Views
Estate Planning
Appraisal for Inherited Property Before You Sell or Split

A call we get more often than you would think might run like this. A daughter has just buried her mother. The house in Skokie is paid off. Her brother wants to sell, and the listing agent has already named a price. Nobody has ordered an appraisal for inherited property, and nobody thinks they need one. Then the CPA asks a simple question: what was the house worth on the day Mom died? Silence.

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

  • Why the value on the date of death, not the sale price, drives your tax picture
  • How an appraiser reconstructs value for a date that has already passed
  • What to hand your CPA so the number holds up if anyone asks

Why an Appraisal for Inherited Property Comes First

When you inherit real estate, the tax code does something generous. It resets your cost basis. Under the IRS rules on basis of inherited property, your starting point is the fair market value on the date the owner died. Not what they paid in 1978. Not the assessor’s number. The market value on that one day.

Say the house was worth $650,000 when your mother died. You sell it six months later for $655,000. Your taxable gain is roughly $5,000, less selling costs. Without a defensible date-of-death value, you have no clean way to prove that. And the burden of proof sits with you, not the IRS.

That is why the appraisal comes first. Before the listing agreement. Before a sibling buyout. Before the return gets filed. An appraisal for inherited property is not paperwork for its own sake. It is the document that every later decision leans on. We prepare these as part of our estate planning appraisal work across Cook County every month. The families who order early spend far less time arguing later.

What a Date-of-Death Appraisal Actually Establishes

The appraisal fixes one number: market value as of the date of death. That number does a lot of work at once.

For income tax, it becomes the basis your CPA uses when the property is eventually sold. In a rising market, the reset usually wipes out decades of appreciation. In a falling market, the basis can step down instead of up, which is worth knowing before you plan around a loss.

For estate tax, the same value goes on the return if one is required. Federal estate tax reaches only very large estates, well above what most families own. Illinois is a different story. The Illinois Attorney General’s estate tax fact sheet sets the state exclusion amount at $4,000,000. It works as a threshold rather than a credit. A North Shore home, a retirement account, and a life insurance policy can cross that line faster than people expect. If they do, Form 700 is due nine months after death, and the state wants the appraisals attached.

There is one wrinkle. Under the IRS instructions for Form 706, an executor who files that return can elect alternate valuation. That values estate property as of six months after death instead. The election has to lower both the gross estate and the tax. It also applies to everything in the estate, not just the house. If your CPA is weighing that election, the appraiser needs to know, because it changes the effective date of the whole assignment.

How a Retrospective Appraisal Works When Months Have Passed

Most families call us after the fact. The death was in March, the probate case opened in June, and the CPA asked for a value in September. That is normal, and it is exactly what a retrospective appraisal is for.

A retrospective appraisal has an effective date in the past. The appraiser inspects the property today, then values it as it stood on the date of death. Only the market evidence a buyer could have seen at that time comes into play. Sales that closed after the effective date do not drive the value opinion. Under the standards published by The Appraisal Foundation, the appraiser has to state that effective date clearly and hold the analysis to it. That discipline matters, because the appraiser already knows what the market did afterward.

Condition matters too. If the kitchen was gutted after the funeral, the appraisal has to describe the kitchen that existed on the date of death. Old photos, the listing from a prior sale, permits, and family accounts all help. The more a property has changed since the death, the more this documentation earns its keep.

In practice, a retrospective assignment costs about the same as a current one. The difference is the research. A year-old effective date in a fast-moving Chicago submarket takes real care, so ask any appraiser you interview how they handle the data cutoff.

Where the Date-of-Death Number Gets Tested

The value gets tested in three places, and each one has a different audience.

The first is the sale. When you list, the appraisal tells you whether the agent’s price is realistic and what the gain will look like at closing. A pre-listing opinion of value also gives you cover if a buyer’s lender appraises low and you need to hold your ground.

The second is the split. When one sibling keeps the house and buys out the others, the buyout price should start from an independent number. Not the assessor’s figure, and not a Zestimate. We have watched families lose a year and a relationship over a $40,000 gap that a single report would have settled. Our residential appraisal team handles these buyout assignments with both sides named as intended users.

The third is the courthouse. If the estate goes through the Probate Division of the Circuit Court of Cook County at the Daley Center, the inventory will show a value for the real estate. A USPAP-compliant report backs that figure in a way an online estimate cannot. Whether a particular estate needs probate at all is a question for the family’s attorney, not the appraiser.

For the CPA: What to Ask For Before the Return Is Filed

Accountants call us about inherited property more than any other professional group. The same problems come up every time. So here is what to specify when you or your client orders the report.

First, put the effective date in the engagement. State the date of death, or the alternate valuation date if the executor is electing it on Form 706. An appraisal dated to the inspection is the wrong answer.

Second, name the intended use. Ask for a report prepared for tax basis and estate reporting purposes. That scope tells the appraiser to document market conditions as of the effective date, describe the property’s condition at that time, and explain the data cutoff. A lending form will not do that.

Third, check consistency. If the estate files Form 706, the value reported there controls the heir’s basis. The executor may also have to issue Schedule A of Form 8971 to the beneficiaries. The IRS FAQ linked above notes that a penalty can apply when a beneficiary claims a basis above the estate tax value. One appraisal, used on both the estate return and the heir’s eventual Schedule D, avoids that mismatch.

Finally, keep the report in the permanent file. The property may not sell for a decade. When it does, the basis question comes right back, and the report is the answer. Our earlier piece on qualified appraisals for donated real estate covers the related IRS rules if the heir plans to donate the property instead.

Order the Appraisal Before the Listing Agreement or the Return

Sequence is everything here. Get the date-of-death value first. Then price the listing, negotiate the buyout, or file the return with a number behind it. Families who reverse that order end up backing into a value after the sale. That is harder to defend and more expensive to fix.

Our lane is the value and the report. How the basis is claimed, whether alternate valuation makes sense, and what the return should say are properly the CPA’s work. When both sides do their part early, the number that reaches the IRS is one that holds.

Inherited a Home and Not Sure What It Was Worth?

PahRoo prepares date-of-death and retrospective appraisals that give heirs, executors, and their CPAs one defensible number to build on.

Request an Estate Appraisal

Frequently Asked Questions

Do you need an appraisal for an inherited house?

In most cases, yes. Your tax basis in inherited real estate is its fair market value on the date of death. An independent appraisal is the standard way to document that value. It also settles the number for sibling buyouts, probate inventories, and any state estate tax return.

What is a date-of-death appraisal?

It is an appraisal with an effective date equal to the day the owner died. The appraiser values the property as it stood on that date using market evidence available at the time. The inspection and report can happen months later.

How do you determine the value of an inherited property?

A licensed appraiser inspects the property and reconstructs its condition as of the date of death. Then the appraiser analyzes comparable sales that closed around that date. The report explains the data cutoff and states a market value opinion tied to that effective date.

What is a stepped-up basis?

It is the reset of an inherited asset’s cost basis to its fair market value at the date of death. If the property has appreciated, the heir’s basis steps up, which reduces the taxable gain on a later sale. If the value fell, the basis can step down instead.

Can I get an appraisal months after the death?

Yes. This is called a retrospective appraisal. The appraiser sets the effective date to the date of death. The analysis then uses only information a buyer could have known at that time. It is routine work for appraisers who handle estate assignments.

Estate Valuation Support Across Cook County

PahRoo Appraisal & Consultancy prepares date-of-death, retrospective, and buyout appraisals for heirs, executors, attorneys, and CPAs. We serve Chicago and Cook County, Dallas-Fort Worth, Philadelphia, Phoenix, and Naples. Every report is developed to USPAP and written so a reviewer can follow the effective date and the evidence behind it. See our full range of real estate appraisal services, or contact our team before the listing agreement or the return goes out.

Read Now

NEWSLETTER

Knowing a property's true value is key
to making informed real estate decisions

Contact us TEST

appraisal@pahroo.com

+1 (773) 388-0003

Visit us

7383 Lincoln Ave Suite,
#100 Lincolnwood, IL, 60712

© 2026 PahRoo, All Rights Reserved