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Subdivision Lots For A Probate And Trusts

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kiritf

Junior Member
Joined
Jan 13, 2014
Professional Status
Certified General Appraiser
State
District of Columbia
All of the trust & probate work I've done in the past has not included anything but commercial/industrial/retail improved/unimproved, residential houses, a lot here and there and some oddball stuff, but none have had any type of multiple lots in a subdivision that would def be discounted in a single transaction.

This one is for probate. I'm throwing out a number: 13 lots. Sounds like a piddly number, but it's a quasi-rural location with 5-7 acre lots an hour west of D.C. No builder would want all the lots unless given to them. They wouldn't want them in a takedown without a massive discount and very drawn out. It's an older subdivision with a very limited HOA in the hills/mountains. These lots were split up 30-40 years ago. People offer a lot for sale here and there and they sell in the $55,000-$60,000 range after 3-6 months.

I was just going to do my regular subdivision/multi-lot appraisal and provide the retail value of the lots, but give them a value for a singular transaction as well (using a DCF). I don't think the attorney knows how to treat it, so I'm just covering myself. It'll be like a 3-4 year sell-off. (I've offered several scenarios and he's just said, "sounds good.")

I also have a client that wants to put several residential subdivisions into a trust (actual, full subdivisions with finished lots in the 40-100 lot range in much better locations than the aforementioned). I'd like to scope to be correct. I have no idea how the IRS looks at subdivisions or "part" of a subdivision when moving them into a trust. I realize it's the attorney that needs to address this with the IRS, but if the IRS looks at just the retail values, then no need to do a sell-off, which is a LOT less time intensive. I obviously need to provide a scope that befits the need.

If anybody has any experience with this, I'm interested to know. It obviously would help if the attorneys knew.....or if they found an attorney with that competency that could assist them (sounds familiar). Thanks
 

nstanbru

Senior Member
Joined
Feb 19, 2009
Professional Status
Certified General Appraiser
State
California
Some of your questions would be better answered by a CPA rather than the trust attorney, especially regarding the IRS issues.
 

kiritf

Junior Member
Joined
Jan 13, 2014
Professional Status
Certified General Appraiser
State
District of Columbia
That makes perfect sense. I'd like to talk to a CPA with that experience one time at least. After that, I can give my two cents to the attorneys and recommend they talk to the CPA for clarity before engaging me.
 

kiritf

Junior Member
Joined
Jan 13, 2014
Professional Status
Certified General Appraiser
State
District of Columbia
You figure there has to be clear language about said issues.
 

Stephen J. Vertin MAI

Senior Member
Joined
Jan 17, 2002
Professional Status
Certified General Appraiser
State
Illinois
Kiritf: Welcome to the forum. I am having a hard time figuring out what you are asking. Are you requesting a scope of work or the direction of the scope of work?
 

glenn walker

Elite Member
Joined
Oct 11, 2006
Professional Status
Certified Residential Appraiser
State
California
Your an MAI we are supposed to be asking you the questions : LOL !
 

Stephen J. Vertin MAI

Senior Member
Joined
Jan 17, 2002
Professional Status
Certified General Appraiser
State
Illinois
Glen: Curious as to what you are talking about? Always love a good joke but I am not sure how it relates to my post. I am asking for clarification on the OP's question. If I get clarification possibly I can help but cannot do so without understanding what is being asked. Please reread my post. You may have misread or read something into it that is not there.
 

Vernon Martin

Senior Member
Joined
Jun 8, 2005
Professional Status
Certified General Appraiser
State
California
I'm guessing that an appraisal based on aggregate retail value might be frowned upon, as it is by FIRREA and USPAP 1-4(c). The customary practice is to discount for absorption or for bulk sale.
 

PL1957

Senior Member
Joined
Jul 19, 2004
Professional Status
Certified General Appraiser
State
Illinois
I'm guessing that an appraisal based on aggregate retail value might be frowned upon, as it is by FIRREA and USPAP 1-4(c). The customary practice is to discount for absorption or for bulk sale.
I don't see anything in USPAP 1-4(c) requiring discounting of lots. It may be appropriate depending on client requirements and value definition, but I don't see it as a USPAP requirement.
 
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