Appraising life estate

[PropertyEconomics]

I work for an outfit that values Life Estates all over the world - if not on a daily basis, then a weekly basis.
There are 100's of scenario's that require the valuation of a life estate.
Even when a life estate sells, it is NOT considered a comparable for consideration in another life estate valuation assignment.

Therefore, after many years of Life Estate Valuation trials in the courts, as well as trying to provide fair compensation in the many legitimate life estate purchases that take place every day - the case study that is provided in this thread is presented (and recognized) as the mainstream and accepted method of valuation for these Real Estate Interests.

Anyone who argues otherwise, without providing a more fair and credible method sounds like an obnoxious drunk at a wedding.

Unfortunately your OUTFIT only makes the rules for your OUTFIT ... not for all of appraisaldom ....
So the answer is we know what your OUTFIT would accept, and thats nice, thank you, but you have no risk in the deal do you? I would suggest a bank or a lender might take a different approach ... they have to live by the OUTFITS that govern them and measure the risk that is appropriate for their endeavors ... which are quite different than those of your OUTFIT ....


Sorry I just couldnt help myself with the outfit stuff .... you started it .....

 

[Louis Pompeo]

I will prostrate myself in apology to Webbed and Rex if:

They can offer a more credible method of valuing a life estate than what was offered by myself.

Keep in mind, that by credible I mean a method that has stood the test of time, has been accepted by the courts, and is considered mainstream methodology.

I've quietly and professionally offered:

A.) What my peers would do, and

B.) What (knowledgeable) clients would expect in a similar assignment.

You say:

It's called avoidance by immediately disparaging the other person versus actually knowing an answer to the counter argument. Probably brought on by never having questioned the status quo once in life and surprised by someone that can or does. Typically, such people just can't bring themselves to adimit the method they've been using just stinks, only so far it is all anyone can figure out for use. Therefore, why engage in a topic regarding the obvious weaknesses of a stinko approach? Why bother trying to improve it via some debate when it's OOOOOH so much easier to just fire up a nice disparaging comment instead?

I see it the other way. I and the methodology were attacked and ridiculed for no reason, with no offer of a "Counter argument."

Questioning the status quo is fine. Ridiculing it and/or the messenger is not. Especially when you do not offer a solution or alternative.

You say "Stinko Approach." All I ask is to prove your statement. Your analogy about a Mercedes, a Yugo, and a Volkswagen Thing are inconsistent with the methodology I presented. It's irrelevant and nonsensical.

I am ready, willing, and able to discuss the merits of the methodology with both of you. But I will do it with proper dialogue, not acrimony, which is all you've offered.

Again, I will offer my apologies to you both, should you present a more credible solution.

Until then, I stand by my observations regarding your lack of sobriety and decorum.

"There is a principle which is a bar against all information, which is proof against all arguments and which can not fail to keep a man in everlasting ignorance - that principle is contempt prior to investigation."
---Herbert Spencer

 

[Louis Pompeo]

Unfortunately your OUTFIT only makes the rules for your OUTFIT ... not for all of appraisaldom ....

The case study that I presented is an excerpt from the Appraisal Institute student handbook "Valuation of Partial Interests - Divided."

My "outfit" is just one of many users with a need to value Life Estates. The method that is presented is the recognized, universal approach to the valuation of these properties, regardless of who the client or intended user will be.

 

[Stone]

I'd be interested in what the alternate theory would be, as well.

 

[PropertyEconomics]

The case study that I presented is an excerpt from the Appraisal Institute student handbook "Valuation of Partial Interests - Divided."

My "outfit" is just one of many users with a need to value Life Estates. The method that is presented is the recognized, universal approach to the valuation of these properties, regardless of who the client or intended user will be.

Actually, and with all due seriousness, I just ordered that book yesterday. Part of the very great AI book sale that has been going on ... many books there to purchase at very reasonable prices. I am going to receive seven titles at just over $300 ..... quite a bargin.

 

[Calvin the Airedale]

So where's the duck with his alternate approach already?

 

[Louis Pompeo]

Conor drums his fingers...whistles softly.....glances at his watch...

 

[Louis Pompeo]

....looks over, and notices that Calvin just cheated at Solitaire....

 

[The Warrior Monk]

Every time I see an example of a Life Estate/Remainderman Interest Valuation, the yield rate calculation is a big secret.

Remainderman interests do sell in the open market; I've come across numerous examples. If that data is available, it would seem to me that it should be used in double-checking what essentially amounts to a mathematical formula.

Also, every single remainderman interest that I've seen transfer is not rounded to the nearest dollar, as the examples demonstrate. They are rounded to market levels (nearest $5K, $10K, $25K, etc.).

 

[Louis Pompeo]

There are plenty of Life Estate SALES that take place. The problem is that no two are alike. Anywhere.

First, the remaining ages and physical conditions of the estate holders are different.

Secondly, the rate of risk differs from property to property and scenario to scenario.

Its easier to defend a "formula" for valuation than a "comparable" for valuation, to laypeople and valuation practitioners alike.

The act of rounding is a clear statement that the conclusions are an approximation of value. As appraisers, we are estimating what a prudent purchaser would pay for the partial interest, not "determining" what that purchaser will pay.