Back to basics – Blending appraisal disciplines to value fractional interests in real estate

Description

Abstract: Valuing undivided interests in real estate requires the use of a real estate appraiser to value the underlying property. Then, a business valuator is needed to determine the appropriate discount for owning a fractional interest in the property. This discount differs from the discounts associated with owning minority interests in closely held businesses. This article discusses the general factors to consider and a common method to use when quantifying fractional interest discounts for real estate.