Partial Interest Valuation

slicing transOften, 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 Affinity Valuation Group, LLC, 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.

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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 Affinity Valuation Group, LLC, we are. Browse our website to learn more about our qualifications, expertise and services offered.

Affinity Valuation Group LLC
Located in: Ann Arbor, Howell, Jackson & Tecumseh, Michigan

Website: affinityvaluation.net  •  1310 S Main St, Suite 7  •  Ann Arbor, Michigan  48104
Phone: (800) 305-8832  •  Fax: (800) 354-9868  •  E-mail: info@affinityvaluation.com

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The material and information contained on this website is the copyrighted property of Affinity Valuation Group, LLC. Any contents within this website may not be reproduced or republished without prior written permission from Affiinity Valuation Group, LLC. The information on this website is meant for educational and commercial purposes. It is not intended in any way to support an opinion of value for your appraisal needs or any sort of value conclusion for any form of real estate transaction or non-real estate purpose. The material found on this website is meant for casual reading only and is not intended for use in a court of law or any other legal use. No employee of Affinity Valuation Group, LLC will appear in any court of law and in any capacity based on any information posted within this website.

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