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Partial Interest...ing

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Tony in Ohio

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Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Ohio
:x-mas: Merry Christmas to you all :x-mas: , been to busy to post much lately, but still lurk occaisionally.


I have been asked to appraise a partial interest (20%) on a single family and a low value vacant lot. As I seldom do partial interests, Any and all advice would be appreciated. I am however,primarily interested in any experiences or suggestions you may have regarding determining a reasonable discount rate.
 

Restrain

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Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
The value of a partial estate is directly dependent on how big it is, what the overall value of the property is, and if the partial estate can be severed.

If the site is large enough (acreage) and the value is significant (read High), then the value is essentially the % interest * value less cost to sever from the whole (attorney fees, survey costs, appraisal fees, etc). I know several attorneys in East Texas who made a nice living doing that. They would buy up some undivided interests from various heirs for pennies on the dollar, some for as low as $25, then forcing partition in county court. Once they have a marketable piece of property, they sell it for a significant profit. They are criticized, but the fact is that the property was not marketable due to the estate problems.

As to your problem, if the site value is low and the interest is not severable from the whole (platted single family lot), then the value can be said to be either 20% of the whole dependent on the entire site being marketable (all parties agree to sell), or significantly less (sale value less legal fees to force the parties to sell the site in order to get their 20% out). You should talk with an attorney as to what the fees would be.

Hope this helps.

Roger
 

Tony in Ohio

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Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Ohio
Thanks for the advice.

Your story reminds me of a lawyer aquaintance of my father who went around buying up easments, right of ways, unbuildible land reamnants and other unwanted rights, almost always for mere dollars, or back taxes. 95% of them remained worthless but I remember him retiring after someone was compiling land for a skyscraper, and he had the last part. an easement on a 3 x 12 strip of land between two turn of the century buildings that had cost him less than ten bucks to obtain and less than a dollar a year in taxes for about ten years to hold.
 
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