Why Attorneys Order Appraisals for Residential Properties- Western Colorado

by Joshua Walitt

I would say that a good percentage of my business is related to families buying or refinancing homes. Maybe it’s a first time purchase for a young family just starting out or an existing family refinancing their home for improvements or sending one of their kids to college. In these cases I deal primarily with the lenders, appraisal management companies, and real estate agents. What people don’t realize is that a fair amount of my business comes from attorneys needing property valuations for a variety of legal matters. Sometimes it’s still family related such as divorce, personal bankruptcy, or clearing up an estate issue.


Times When an Attorney Will Need a Residential Property Appraisal


When two parties decide to end a marriage they are going to need a valuation of properties jointly owned. In Colorado, a current valuation on all marital real estate holdings will likely be required by the attorneys or the judge. Appraisals will definitely be required if there is any dispute between the parties for settlement purposes. Since disputes often occur over the perceived values of marital properties during a divorce this is the most common reason for a lawyer needing to hire a real estate appraiser. Often I can suggest the most effective scope of work for precise documents to be utilized in court for my attorney clients.



If you own a home and decide to declare bankruptcy the court is going to require a current property valuation. At this time your bankruptcy attorney is going to have to call a residential real estate appraiser to satisfy the court’s valuation requirements.


Bail Bonds:

When an attorney’s client is arrested often the court will set bail and the defendant will post bond. These bail bonds are usually secured against real estate property. Because of this, the bail bond company may require a property valuation to make sure there is enough equity in the home to secure the bail bond. These types of property valuations are often satisfied with what is known as a “Desktop” appraisal.


Estate Planning/Wills/Probate:

Here in western Colorado I’ve seen several instance of what can happen regarding real property when it comes to estate planning and probate. The executor of a trust needs strong numbers to satisfy IRS and various state and county agencies. Now for tax planning reasons a trust or tax attorney will call a real estate appraiser to value a property prior to it be entered into the trust. An executor settling a will might need an appraisal to determine Market Value of the property at the time of fatality. And unfortunately if estate planning didn’t occur and a property goes into probate, a real estate appraiser may be called in by an attorney to provide a value.


Property Tax Assessment Appeal:

If you live in Garfield, Delta, Montrose, or Mesa county in Colorado and believe you’re overpaying on property taxes; you’ll need to go and dispute your property tax bill at the county assessor’s office. If you are working with an attorney specializing in property tax law they will need to order an appraisal to determine whether the property’s value is less than what is on the county tax rolls to apply for a reduction. Attorneys need to be confident that they are working with a real estate appraiser who provides iron clad property valuations that will stand up to county scrutiny and help win the property tax reduction. I myself have value dispute experience with the county.

These are just a few of the situations why an attorney would order an appraisal for residential properties. I know from personal experience that an expert appraiser can provide key and instrumental evidence with a quality appraisal.


The above statements are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. The opinions expressed at or through this article are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.


WATCH Related Tutorial Video: Why Real Estate Agents Order Appraisals VIDEO


Exterior-only Appraisal: Thinking Outside the House

I do pre-foreclosure and home equity work for several clients, and their assignments include some Exterior-From-Street appraisals. Insurance companies and agents request this type of report as well. Recently, I heard from an appraiser who doesn’t do “drive-by” Exterior-Only assignments. I understand, as part of managing businesses appraisers make different business decisions related to the nature of the work they will and will not accept. And I’m never about to tell another appraiser what work to accept and what work to avoid. (I enjoy a good Full interior-and-exterior inspection and I often hear from homeowners they are impressed that I spent more than 15 minutes at their house – so, I’m not advocating eliminating Full inspections!) But it’s the reasoning I’ve heard over the years, for not performing Exterior assignments, that I don’t always agree with…

Josh Walitt 12-2013 e

“How can I appraise it? I don’t even know what’s inside!”

That’s exactly why extraordinary assumptions are used. The Exterior-Only appraisal scope is specifically based on NOT knowing 100% about the property – that’s the point.


“I’ll do the sales comparison approach, but not the cost approach – after all, I don’t know the quality or condition!”


My next question is always, “Then how are you developing a sales comparison approach without knowing the quality or condition?” The extraordinary assumption enables you to “know” subject characteristics for purposes of the appraisal.


“How can I make an extraordinary assumption? I don’t know what’s in the property!”


Right. That’s what an extraordinary assumption is.


“But it’s a manufactured house and the form needs the HUD tag for me to appraise it!”


A lender might need the HUD information for lending policies, but certainly an appraiser can opine value without knowing that HUD information. And since when is a form in charge of the appraisal process?


Now, I know that there are sometimes good reasons for NOT performing an Exterior-Only, and we need to consider the availability of information, the intended use, the complexity of a property, conflicting available information, etc.. For example, I was recently asked to appraise a property from the exterior for a refinance, but county records indicated it had two single-family detached houses and a detached garage with what appeared to be sq.ft. above it. In this situation, I messaged the lender that I believed the appropriate scope of work for this assignment would be an interior-and-exterior Full inspection of the property and I insisted on an “upgrade” to that scope of work. After I quoted my fee and turn-time, they agreed, and I’m going next week.

Residential Appraisal

On the other hand, an agent recently talked to me about her current listing which has had few showings and no “bites”. She has a prior appraisal (sketch, etc.), a virtual tour and MLS information and photos, and of course these sources are available to me. For this listing-related assignment, it may be possible to have a desktop scope, using data from the county, the sketch, the tour, the MLS and other sources to establish the characteristics of the subject through extraordinary assumptions, for the intended use of this assignment.


When an appraiser automatically refuses to do any Exterior-Only work, I sometimes ask, “So, does the property not have a value if you can’t see inside?” I realize they’re not really claiming that (and my response is a bit tongue-in-cheek), but for partially- or fully-destroyed properties, hostile occupants, pre-foreclosure, portfolio or retrospective work, it may not even be possible to gain access. So I maintain my point does stand: the property still has a value even if you can’t get inside, and a client may need an opinion of that value.


The question is, Can you develop a credible report by making reasonable extraordinary assumptions for the intended use of the appraisal?

WATCH Property Inspection Video

Originally printed in Appraisal Buzz. Click here .