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How 2 value partial interest?

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Pia Loeper

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Nov 20, 2003
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Certified Residential Appraiser
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California
Help! I did an appraisal for an accountant/estate valuation, and now they have requested a value for a partial interest. Is there someone who can mentor me in this, preferrably in the East Bay? Or is this a simple thing I can learn, by reading about it (as if something is simple in appraising????) A quick response would be appreciated. Of course they needed it yesterday.........
 

Obsolescent

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Jul 6, 2004
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Certified Residential Appraiser
State
Minnesota
This is a very difficult assignment. Do a search here for "partial interests" and you will find some answers. You will likely need a mentor. There are a lot of nuances in appraising partial interests. There is also a book you can pick up through Amazon. Its about $80 though. You will need to find other sales of partial interest properties and figure an appropriate discount, if applicable..that is the hardest part. A 50% partial interest may not be 50% of the aggregate appraised value. Anyway, do the search, it will explain it more in detail.

P.S. You're going to have to inform your client that you've never done a partial interest appraisal before.
 
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David Wimpelberg

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Mar 30, 2005
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Certified General Appraiser
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New York
Appraising partial interests is a specialty. As with any specialty, it is best to work with someone with experience in that field.

Also, I assume that by estate valuation you mean that the report is IRS bound. If that is the case, be prepared to defend your report.
 

Terrel L. Shields

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May 2, 2002
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Certified General Appraiser
State
Arkansas
The complexity will depend upon the nature of the partial interest. There are some instances where I lack the imagination that an Accountant or lawyer desires in discounting heavily for things that probably don't need to be discounted or only modestly so, like the 'discount' for joint estate between a man and wife (courts don't like discounts there). And a partial estate might mean a mineral interest, timber interest or leasehold interest, lifetime estate, etc.
 

PropertyEconomics

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Jun 19, 2007
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Certified General Appraiser
State
New Mexico
I would simply suggest the accountant assign partial interest values based upon your analysis of the fee simple estate. If you do not have proper sales of partial interests which you can analyze in order to estimate the amount of adjustment (if any) I would suggest measurement from the market can not be made.
You may attempt to do so by estimating the costs of partitioning the partial interests by court order, however, this would be a very worst case scenerio.
Have a long discussion with the accountant before you tackle this assignment.
 

Mike Boyd

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Jan 18, 2002
Professional Status
Retired Appraiser
State
California
I would simply suggest the accountant assign partial interest values based upon your analysis of the fee simple estate. If you do not have proper sales of partial interests which you can analyze in order to estimate the amount of adjustment (if any) I would suggest measurement from the market can not be made.
You may attempt to do so by estimating the costs of partitioning the partial interests by court order, however, this would be a very worst case scenerio.
Have a long discussion with the accountant before you tackle this assignment.

I agree with PE. You may have to interview the owners of the individual interests. Some may be disagreeable to the division and fight it. This will significantly increase the costs and thus diminish the individual interests.
If the accountants will not assign the individual interests pursuant to your appraised value of the whole property, I would enlist the assisstance of an appraiser who has experience with this type of work. They will likely tell you the fee will be about 10 times an ordinary appraisal fee.
 

Fred

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Jan 15, 2002
Professional Status
Retired Appraiser
State
Virgin Islands
like the 'discount' for joint estate between a man and wife (courts don't like discounts there
Could that be because courts can figure out that a joint tenancy is different than tenants-in-common, for example? :unsure:

IMO, that might be a good test of whether one can do these. Not knowing the difference between JT and TIC in partial interest discounts is like not knowing the difference between a 100-year old Victorian in a historical district and a new condo unit. Two completely different properties.
 
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