Discounting partial ownerships

[vargasteve]

I know this is both a residential & commercial issue - in my case I'm a residential appraiser. BUT, those here will be more aware of this. I did post something similar in another thread but no helpful responses.


Appraisal Institute does have a course in which part of it covers discounting a partial ownership interest. However, they are not offering the class at this time. It's a dormant course.

I'm looking for a book or resource to help me determine in some cases with multiple heirs on residential real estate if / when discounting is worthy, and a resource to guide me in the process.

For example 10 residential properties worth X, with 4 heirs & equal shares. What is an individual share worth? I have a case like this with a $6.5 million porfolio value.

Any suggestions or resources?

 

[Vernon Martin]

I've heard that the ASA is more attuned to the appraisal of partial interests than the other professional associations, so you might check them out. In general, you need to make a deduction for lack of liquidity.

 

[vargasteve]

Thank you very much Vernon, I'll check that out.

 

[Boonders]

Partnership Profiles has an extensive book and database for partial interest valuations. Typically considered the business valuation realm.

The AI has a class in Colorado and then another somewhere else this year on case studies in partial interest valuation. Its a follow up to the "dormant" course. Can't remember the guy's name that is teaching it, but i believe its the same guy that wrote the initial class. Look him up and I think he has a book or something too.

 

[Howard Klahr]

Here are the links to two books

Appraising Partial Interests

Valuing Undivided Interests in Real Property: Partnerships and Cotenancies

Hope it helps

 

[DWiley]

We do partial interest appraisals of residential properties on a regular basis (for estate planners). Give me a shout and I will share some things that have worked for us.

DW

 

[vargasteve]

Thanks guys! I did check the ASA out, haven't found what I'm looking for there.

I'll call you DW

and thanks Howard & Dane - I will look this up.