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How the property value of estate property is determined

There are several factors that go into how the value of estate real property is determined. The first consideration of determining property value is condition of the property and premises; second is location and neighborhood, and the third is recent sales prices of comparable property values within half a mile of the estate property. The assessed value on real property tax bills generally do not reflect the true value and should never be used to determine the current property value in the marketplace.

Some people think that a private appraisal by a licensed real estate appraiser is good evidence of the value of the estate property, but it can be expensive. As a Real Estate Broker in the Inland Empire & High Desert area, I can provide a fairly accurate Comparative Market Analysis and I do this as a courtesy, and at no charge.

Keep in mind, if a formal probate proceeding is required, spending money on a private appraisal is not necessary, nor do I recommend it. A court-appointed referee will perform the appraisal, so the fee for a private appraisal will be wasted. The probate referee will charge a fee for this service. If a formal probate proceeding is required, the real property will be appraised by a probate referee at a cost of one-tenth of one percent of the property value.

Why is an appraisal needed in a probate?

The appraisal:

  1. Determines the property value for tax purposes so that the gain or loss on sale can be calculated;
  2. Sets a property value in the event the property has to be divided among more than one beneficiary/heir; and
  3. Establishes a basis to calculate the statutory representative and attorney fees.

A few other things to remember are: when the estate representative is selling a property involved in probate, the sales price may not be less than 90 percent of the probate referee appraised property value. And, the appraisal by the probate referee must be within one year of the date of the sale. The property is appraised typically as of the date of death. So, if it has been a year or close to a year from the date of death, I recommend that this be discussed with the attorney. As we’ve all experienced, the market can change in a year, and the court may order a reappraisal to make certain the property is being sold at fair market value.