Alleged Errors of Commission
This chapter focuses on affirmative actions by appraisers that courts ruled were mistakes, including at least one in which a trial court was called down by an appellate court for making a valuation mistake.
A dilemma inherent in retrospective appraisals is that life and business carry on after the valuation date. Consequently, the events and cycles of a continuing, post-valuation date reality become known to appraisers as well as to other stakeholders to the valuation process. The essence of uncertainty, economic or otherwise, that envelopes any given point in time is lost when subsequent reality becomes visible and measurable. The issue with the evolution of future expectations into hindsight is that subsequent events to an appraisal valuation date are not supposed to be considered in an appraisal other than to the degree such events and conditions could have been reasonably expected to occur (i.e., an outcome among other outcomes within the horizon of reasonable probability). Not only are an appraiser's observations and perspective potentially influenced by subsequent events, so can the information and feedback provided by the various stakeholders to an appraisal event. The question often is whether that information was knowable as of the valuation date. Love Est. v. Comr.1 is instructive on this issue:
Second, after Mrs. Love's death, Praise was determined to be in foal. Surely, this increased her value considerably. ...