The "As Of" Date Of Valuation
An appraisal is a supportable and defensible estimate of value of a property "as of " a certain date. The "As Of " date sets up the conditions at the time of the value estimate, such as, physical conditions, economic conditions, etc. The date of sale is important due to the market condition "as of" the date of the sale.
The "As Of " date is critical in every appraisal report. It's critical because the house you're appraising is most likely worth a different price today than it was one year ago. The house will also be worth a different price one year after today. Changes in the market value are created by the fluctuating market. Therefore, you have to account for this fact. You decide what the typical buyer would pay in an "arms length " transaction, "as of " the date you are estimating the market value of the subject property. For example, let's say you're doing a house appraisal for an estate. Estate appraisals are always needed for tax purposes after someone dies. However, often the people overseeing the estate will order the appraisal many months or even years after the owner of the property has died. Let's say the person died four years ago. Then you would have to go back and find records of sales comparables from four years ago. You would also have to find the information needed for the Cost and Income Approaches at the time of the owner's death. If the person died 20 years ago, then you would have to go back 20 years to estimate the market value! The reason for this is due to the "As Of" date of your appraisal which in this example is 20 years ago.
One of my instructors for the appraisal courses told us that he has a friend who had to do an appraisal for a particular group of American Indians. They were trying to decide how much money the government owed these Indians, in today's dollar value, due to land that was taken from them many years ago. The "As Of" date of the appraisal wasn't just 20 years ago; it was 200 years ago!!! Imagine trying to find data from 200 years ago to do all three approaches to estimate market value of vacant land? To make it even more difficult, the appraiser had to figure out the value of the land in today's prices. Two hundred years ago many things were purchased with bartering instead of money. So instead of paying someone a $10 bill, you paid them with some food, or tools, or cattle, or anything else you could exchange with them. (Do you think you would be able to do an appraisal assignment like that?)