Standards Rule 2-2(a) (vi) requires an appraiser, in an Appraisal Report, to:
(vi) state the effective date of the appraisal and the date of the report;
Comment: The effective date of the appraisal establishes the context for the value opinion, while the date of the report indicates whether the perspective of the appraiser on the market and property as of the effective date of the appraisal was prospective, current, or retrospective.12
The effective date of the appraisal must be stated, as well as the date of the report.
If the client requires a current opinion of value, the effective date will likely be the date of inspection. The effective date can, of course, be any date, consistent with the needs of the client and the intended use of the appraisal. Fannie Mae and Freddie Mac require that the effective date must be the date that the property was inspected.
The report date is the date that we prepare and sign the appraisal report and transmit it to the client. Unless we are very quick in our turnaround time, this date is not likely to be the same date as the effective date of the appraisal.
In a retrospective appraisal assignment, the effective date will be prior to the date of the report. In a prospective appraisal assignment, the effective date will be subsequent to the date of report.
Here is an interesting USPAP FAQ, dealing with a retrospective value.
- RETROSPECTIVE APPRAISAL ASSIGNMENTS
Question: I was recently asked to complete a retrospective market value appraisal for which the effective date of the appraisal is two years prior to the date of the report. In researching this assignment I discovered several comparable sales that were listed and placed under contract prior to the effective date of the appraisal, but actually sold well after the effective date. Would it be appropriate to use only these sales in my sales comparison approach to value?
Response: In a retrospective appraisal the analysis should reflect the market conditions that existed on the effective date of the appraisal. Only using comparable sales information that was not available to the market place, or did not exist as of the effective date of the appraisal could be misleading because it would not reflect information available to the marketplace during that time period.
Retrospective appraisals and the use of data from the time period after the effective date are addressed in Advisory Opinion 34, Retrospective and Prospective Value Opinions. AO-34 states, in part:
A retrospective appraisal is complicated by the fact that the appraiser already knows what occurred in the market after the effective date of the appraisal. Data subsequent to the effective date may be considered in developing a retrospective value as a confirmation of trends that would reasonably be considered by a buyer or seller as of that date. The appraiser should determine a logical cut-off for the data to be used in the analysis because, at some point distant from the effective date, the subsequent data will no longer provide an accurate representation of market conditions as of the effective date. This is a difficult determination to make. Studying the market conditions as of the date of the appraisal assists the appraiser in judging where he or she should make this cut-off. With market evidence that data subsequent to the effective date was consistent with market expectations as of the effective date, the subsequent data should be used. In the absence of such evidence, the effective date should be used as the cut-off date for data considered by the appraiser.
While the effective date is not an absolute cut-off point for market data, the appraiser must use particular caution in applying it in these assignments.