Intangible Value in Real Estate Partnerships
Intangible value is attributed to the buyer and seller and is typically where the deal will be struck. Since, all transactions are made at investment value, which is based on the buyer’s and seller’s view of the worth of the investment to themselves. Intangible value has to have been present at the time a shared ownership arrangement is entered into. Fractional ownership is created when there are benefits realized by both parties, and these benefits are mainly intangible.
Before the buyout process, it is important to make sure all is set up for success. In order for all parties to agree on a buyout process and pricing mechanisms, it may be necessary to reduce the discount required for exit pricing.
While there are many benefits and detriments to go through before the buyout transaction, the valuer is usually able to interview the parties and figure out what should be considered. In family partnerships, internal trust and confidence is an important intangible element to craft provisions that will benefit future generations.
To learn more click the link: https://www.appraisalinstitute.org/assets/1/7/Valuing_Fractional_Interests_2_0_%20_Handouts.pdf