Understanding the Role of Market Value in Executor Sales

Executors are tasked with acting in the best interests of the estate and its beneficiaries. When it comes to the sale of property by an executor, one burning question often arises: Can an executor sell property below market value? Is that actually in someone’s best interest? 

This is a crucial question for beneficiaries, heirs, and anyone involved in the probate process to understand. Let’s explore this question and discuss the significance of market value, how it is calculated, and its role in property transactions involving executors.

Can An Executor Sell Property Below Market Value? 

Yes. Selling a property below market value can be justifiable in certain situations, including:

  • Urgency: If there is an urgent need for liquidity or if the property requires immediate disposition, selling below market value might be an acceptable option.
  • Maintenance costs: If a property incurs significant upkeep costs or is at risk of depreciation, selling below market value might be a good decision for all involved.
  • Lack of interest from buyers: Economic downturns, local real estate market fluctuations, property conditions, location, and other factors may impact overall interest. If the property isn’t generating much buzz, considering a lower offer might be the best option. 

Keep in mind that executors must exercise transparency throughout the process to avoid legal issues and disputes. Transparency includes obtaining approval from relevant parties, such as beneficiaries or the court, and adhering to all state laws and the terms of the will.

Why Is Market Value Important for Executors?

For executors, the market value of a residential or commercial property serves as a benchmark for making informed decisions about the estate. Executors need to understand how the property fits into the current market and overall estate in order to accurately make recommendations in regards to sale price, asset distribution, property maintenance, and more. 

Selling a property below market value may raise concerns among family members, beneficiaries, creditors, or other interested parties. It could impact the overall value of the estate and result in an uneven distribution of assets.

Whether planning to sell the commercial or residential property or not, executors have a fiduciary duty to act in the best interests of the estate and its beneficiaries. Open communication with beneficiaries, transparency in decision-making, and adherence to legal and ethical standards are essential aspects of fulfilling this responsibility.

How Do You Calculate the Fair Market Value of an Inherited Property?

Several methods can be used to determine the fair market value of inherited property:

Professional Appraisal

Hiring a certified real estate appraiser is one of the most accurate ways to determine fair market value of an inherited property. Appraisers consider various factors such as the property’s size, condition, location, unique features, the original purchase price, and more.

Sales Comparison Model

One financial model used to determine market value is the sales comparison model. 

This approach involves analyzing recent sales and comparing the inherited property to similar properties recently sold in the area. Then, the appraiser will make adjustments based on differences in property features, conditions, and other relevant factors.

Cost Approach Valuation Model

The cost approach model is another common financial model used to determine market value. 

This approach estimates the inherited property value by looking at the cost of replacing or reproducing the property. Appraisers will analyze the land value, estimate construction material and labor costs, and deduct depreciation to determine an accurate property value.

The cost approach model is most common when valuing new, in-development, or renovated properties. 

Work With the Experts at Akrivis

Whether or not an executor can sell property below market value requires careful consideration and an understanding of the overall market and estate. Overall, market value is important for making informed decisions, ensuring fairness to beneficiaries, and upholding the integrity of the probate process. 

To learn and better understand the process, contact the valuation experts at Akrivis. We’ll work with you to get an accurate property value within 5 business days. 

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