When a loved one or close family member passes away and leaves behind a piece of real estate, it's not always bequeathed to one individual. Sometimes, however, one family member will want to keep it and chooses to compensate the other family members for their ownership share in the property. In order to do this, the value for the property must be known.
Illinois residents seeking to assign value to real property in an estate will need to keep one primary consideration in mind: Real estate property value is a mix of its current value and the potential future benefits that property can provide its owner.
In this respect, real estate property estimates must consider social and economic trends, government regulations and environmental factors that might alter the following four areas of property value:
- Scarcity: Are other, competing and comparable properties available for purchase?
- Demand: Is the wish to own the property supported by sufficient financing to make it possible.
- Transferability: Can the property be transferred to a new owner easily?
- Utility: How well can property satisfy the needs and goals of the owner?
The value of the property could also be different from the "cost price," which is also important to keep in mind. The cost price refers to the cost of labor and materials required to improve the property or make it liveable in a certain way after purchase.
Issues relating to the value of a property that will be shared amongst heirs could come up during the probate process itself. However, the valuation of the property might also come after probate has completed. If you are trying to divvy up the value of a property in an Illinois estate, your estate administration attorney can help guide you through this process.
Source: Investopedia, "What You Should Know About Real Estate Valuation," Jean Folger, accessed July 14, 2017