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discount on the Kmart property to be 35 percent,2 the Walgreen
property discount to be 30 percent,3 and the Wells Fargo property
to be 35 percent.4 Hulberg based his discounts on several
factors. First, he emphasized the fact that neither owner of the
property had control. He pointed out that any potential buyer of
decedent’s property interest would consider the lack of control,
the risk in terms of cost to partition, delay of partition, lack
of liquidity of the real property, lack of marketability for
resale, and the inability to finance without consent of the other
owner.
Hulberg used three different approaches to determine the
proper discount. The first was the “Company Survey Method”,
which was described as a “survey of companies in the business of
purchasing and selling partnerships.” This method is less
relevant because the properties are closely held family-owned
entities and less marketable than diversely held entities.
Hulberg uses this method due to the limited number of comparable
sales of fractional interests in real estate and suggests that
there is a close analogy between fractional real property
2 This reflects a 15-percent discount for lack of control
and 20 percent for lack of marketability.
3 This reflects a 15-percent discount for lack of control
and 15 percent for lack of marketability.
4 This reflects a 15-percent discount for lack of control
and 20 percent for lack of marketability.
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