How to Avoid Costly Appraisal Mistakes That Trigger IRS or Probate Problems
Not all valuations are created equal. In estate work, the appraisal is evidence—and weak evidence can lead to audit exposure, family disputes, or delays with the Commissioner of Accounts. Here’s how to avoid the pitfalls we see most often in Northern Virginia estates.
Pitfall #1: Treating a DOD appraisal like a routine refinance
A DOD assignment is retrospective. The analyst must reconstruct the market on a past date and often rely on archived data and dated photographs. A good report explains why specific sales are comparable for that past date, and how adjustments mirror that period’s market. USPAP sets the bar for competence and reporting; insist on it. The Appraisal Foundation
Pitfall #2: Substituting a letter or an online estimate
The IRS (and Virginia) expect real documentation. Virginia’s Tax Commissioner has stated that a letter from an appraiser is insufficient in valuation disputes; courts and taxing authorities want a full narrative report with methodology and support. Don’t risk a rejection—or worse, penalties—by skimping on the appraisal. tax.virginia.gov
Pitfall #3: Using county assessments or the wrong valuation date
Local assessments (e.g., Arlington’s January 1 values) are for real estate taxation and rely on mass-appraisal techniques, not individualized market analysis on a specific past date of death. Those numbers are not a substitute for a DOD appraisal. Arlington, VA
Pitfall #4: Ignoring the Alternate Valuation Date
If values dropped in the months after death, you might leave money on the table if you don’t evaluate the six-month option under IRC §2032. Have a professional model both dates so your CPA can quantify potential tax savings before you file. Legal Information Institute
Pitfall #5: Hiring someone unfamiliar with Virginia probate and local micro-markets
Probate in Virginia runs through the Circuit Courts, and Northern Virginia neighborhoods (Arlington vs. McLean vs. Vienna) behave differently—even within the same month. Your appraiser should be fluent in these micro-markets and prepare reports that stand up to local practice and court oversight. Virginia Court System
What a “defensible” appraisal delivers
- USPAP-compliant reporting by a Virginia-credentialed appraiser
- A clearly stated retrospective effective date
- Comparable sales that bracket the date, with transparent, supported adjustments
- Market narrative tied to the valuation period
- Organized exhibits and citations to data sources
Final word: Estate administration is complex enough. Protect your family, your fiduciary duties, and your tax position with a professional, retrospective DOD appraisal that’s built to withstand scrutiny—from the IRS to the probate file.