"Effective date" is a term that gets mentioned a lot without explanation of what it means in an appraisal. Although it may seem self explanatory, there are some things that are good to know about the effective date of your appraisal.
For most appraisals, the effective date is the date of the inspection. The appraiser sees the home and takes photos that day, and so the appraisal is made and value is determined as of that day-- this means that the appraiser cannot take into
account anything that happens after that day. For example, once we were at an inspection and the kitchen linoleum was outdated and in bad condition. The homeowner explained that he was just about to lay new tile himself, he even had all the supplies in the garage! However, we could only count what we saw on that day. In a situation with a big improvement planned, it might be worth it to postpone the appraisal until the improvement is completed! Depending on what it is, it could affect the value.
Effective date is not always the date of inspection-- it could also be a day in the past, such as a date of death appraisal also known as an estate settlement appraisal, or an appraisal for insurance purposes due to fire, flood, etc. In a case like this, the appraiser will inspect what is there, but will take market data and sales comparables from the time period of the effective date. Any market data or comparable sales from after the effective date can be considered in the valuation process according to USPAP. It just needs to be added before the date of signature and adjusted for time if the market has had a major shift.
If you have any questions or comments, feel free to contact us!
