75% Interest In An SFR

[Bingo]

I have a client that owns 75% of a single family home that was inherited. Six others own the other 25%. They would like a value of the 75% interest. Any thoughts on this assignment would be appreciated.

 

[Pittsburgh Pete]

Wouldn't expect to see much of a discount if any on the 75%--he should have control with that percentage. Only issue might be marketability but it would be minor.

 

[Tom D]

looks like simple % math, just like cutting a a whole pie. the hard part is how many of them will dislike your value.

 

[Meandering]

Undelineated interest, just a percentage of the net after the sale.

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[AMF13]

Any thoughts on this assignment would be appreciated.

Note to self. Don't sell off, or will, small percentages of the house to anyone.

 

[leelansford]

I have a client that owns 75% of a single family home that was inherited. Six others own the other 25%. They would like a value of the 75% interest. Any thoughts on this assignment would be appreciated.

Talk to your client. Tell the client that you may provide the client with an opinion of Market Value and allow the client and others to conclude the value of the 75%. Seriously.

 

[KHS445]

Ownership is just one of the possible issues you need to consider. I understand it is an inheritance, is the house vacant or is someone in possession/lingering tenancy rights? Who controls occupancy or use of the property? In my experience, so many times when estate planning is done by deed there is an increase in other issues that may affect ownership/sale ability/etc.

If the majority owner has complete control and use of the property, with the minority owners being owed a percentage of any sale proceeds then I agree with others that you should value it at market. On the other hand if the minority owners can reject a sale as not providing them with adequate compensation, then all bets are off and the majority owner may actually have to pay the minority owners a premium to get them to sell their interest or to sign off on any deal. The alternative would be a lawsuit seeking clarification of ownership/possession/use/ability to sell/etc. We all know that only the attorneys will come out ahead in the event of legal action.

 

[Howard Klahr]

Inform your client about your lack of competency in valuing partial interests and partner up with someone that is competent.

 

[hastalavista]

Inform your client about your lack of competency in valuing partial interests and partner up with someone that is competent.

That's what I did (and thank you, Howard).
After you do, and you do the assignment correctly, that competency can create a nice niche market.

 

[DWiley]

A

That's what I did (and thank you, Howard).
After you do, and you do the assignment correctly, that competency can create a nice niche market.

i agree that this can be a nice niche or work. Estate planners often use partial interest gifting and they also need appraisals of such interests. When I had my firm we did these on a regular basis.