Partial
interest valuation Often, the
ownership of a property isn't cut and dried.Bill Jones might own a property outright, by
himself, unencumbered by liens or mortgages, leases or easements.But he might also own it
as a "joint tenant" with his wife, Mrs. Jones.The Jones' may lease some of the property to another
party. They may
have signed an agreement to give up any subsurface or mineral rights they have
in the property in exchange for cash. There may be a restriction in the Jones' deed
stipulating that the property must never contain a structure more than two
stories in height. There are a thousand other ways the 100
percent "bundle" of rights to a parcel of property might be distributed. Anything less
than full ownership -- called "fee simple" in deeds and conveyances -- by a
single person or entity is a "partial interest." Here at RHL Real Estate Appraisals, Inc., we appraise
partial interests all the time. It's a specialty and discipline that takes
unique expertise and training, and you can be assured we're well qualified to
deliver an opinion of value on a partial interest. When might
you need a partial interest valuation? In divorce or
dissolusionment of a partnership proceedings, you might need to fairly value one
party's interest in real property. Sometimes, particularly in partnership
situations, it's not simply a matter of appraising the entire property and
dividing by the number of owners. A fractional share of property may sell at a
discount to reflect lack of control, costs of and barriers to sale. You need the
judgment of a professional appraiser. You might
need the value of rents or leases on a property, but not the underlying value of
the real estate. This is more complicated than it sounds, and
isn't just a matter of how much a tenant is currently paying. A professional, well
trained appraiser will examine rents in the market to determine fair market
value of rents or leases. If a tenant is paying below market
value, they might be able to sublet at a profit. If they're
paying over market value, their likelihood of moving on when the lease term
is up increases. There are many things requiring the
professional judgment of an appraiser that factor into the calculation. You might
need to know the value of a proposed or existing easement. An easement is a
right to use property, without owning it.How much is it worth to your neighbor to build a
driveway across part of your property for entry to and exit from his property,
rather than an alternate route that may be more costly to build? You might
need an appraisal of your (or your customer's) interest in a timeshare or
condominium. Because there
are so many ways the "bundle" of rights to property can be divvied up, when you
order an appraisal you might need a partial interest valuation and not even know
it. You should
be sure the company you hire is qualified to perform partial interest
valuations. Here at RHL Real Estate Appraisals, Inc., we are. Browse our website
to learn more about our qualifications, expertise and services offered. |