Do you need a partial interest valuation?

Often, the ownership of a property isn't cut and dry. John Doe 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. Doe. The Does 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 Doe’s 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 Metro Appraisals, 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.

Partial Interest Valuation

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When might you need a partial interest valuation?

Separation of partnership

In divorce or dissolution of 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 for a partial interest valuation.

Rent or lease values

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 a 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.

Easement

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?

There are a number of considerations that require the assessment from a qualified appraiser to factor into a property valuation, and 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 a valuation on partial interest. At Metro Appraisals, we are. Contact us today to learn more about our qualifications, expertise and services offered.