Property Valuation Strategies for Estate Administrators
The biggest investment most people make during their lifetimes is a home, and it is the largest asset they leave behind after their passing. Given the volatility of the real estate market, a current property valuation is essential in settling the estate, yet less than a third of people with wills make such updates. Thus, it is up to the executor to get a current property valuation.
Why Is Current Property Value So Critical?
Say that you are about to receive a real estate inheritance. Your father’s will states that the home he owned should go to you while an equal amount of the securities in his investment portfolio should go to your sister. Any remaining assets should be sold and the proceeds donated to charity.
The first order of business is for the executor of the estate to get a current market value of the home even if you plan to keep it. Your sister’s inheritance will be determined by that value, according to the terms of the will.
At the time your father made a will, his home may have been worth $500,000, but due to a booming real estate market, it may now be worth $900,000. The difference is significant, so the executor must use all the tools available to get the number right.
An inaccurate valuation would make your portions of the estate unequal and, therefore, not in keeping with your father’s last wishes. If the value set for the real estate is too low, you would benefit. If it is too high, your sister would come out ahead.
Additionally, in the intervening years since your father signed the will, his investments might not have kept pace with the real estate market. You could find that the home is a much more valuable asset than the investment portfolio. What do you do then? In such a situation, the assistance of an estate planning litigation lawyer is likely necessary to reach a fair resolution for everyone concerned.
Factors That Affect Property Value
The main factors that impact how much a property is worth are:
•Location
•Home size
•Home condition and age
•Current home inventory
•Current demand for homes
•Local/national economy
The important thing to remember is that what you believe to be the worth of the property may not match with its market value. While you may remember the old neighborhood fondly, it might have changed drastically since you lived there, or it may not be the most desirable location for buyers in its price range.
Size wise, the property may not meet the standards of current buyers. If it is larger or smaller than current trends dictate, that will bring down its market value. If the home is small, but there is room to add on, that could be a positive.
The condition of the property, although reasonable for its age, also affects its value. Maybe your father remodeled 10 years ago, but the kitchen has begun to look dated. If other available properties in the same zip code have more current updates, yours will not compare favorably in terms of market value.
If the property happens to be in a desirable neighborhood, and demand is high, its value is likely to be on the upper end of the spectrum despite any minor repairs or updates it needs. If the economy in the area, and the country at large, is strong, property values are generally higher.
While it can be difficult to consider all these factors and come up with a fair property value, comparing similar properties that recently sold is one tried-and-true strategy. Also, a professional appraisal is worth the cost. It can streamline the real estate valuation process and leave little room for debate.
How Can an Estate Planning Litigation Lawyer Help?
An estate planning litigation lawyer can help you solve the problems that come up during probate regarding such factors as real estate value, which can become a significant issue without professional guidance. If you are in Hackensack, NJ, contact us at The Knee Law Firm at (201) 996-1200 to get the assistance you need during this difficult time. We bring experience, knowledge and objectivity to the table to help resolve estate administration issues fairly and effectively.