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fractional interests in Louisiana timberland should be discounted
by 55 percent, those opinions were based on means or averages of
the fractional sales information available. We also note that
the full fair market value of the properties used as comparables
may have been questionable, so that the discounts could have been
smaller or larger depending upon whether the actual fair market
value was lower or higher.
Mr. Steele’s personal experiences during more than 20 years
of involvement with fractional interests in Louisiana, reflect
the following.
(1) The fact that the market is severely limited drives
prices down (increasing discounts). Most buyers have no desire
to expend the time and expense to acquire full ownership.
Generally, timber companies are not interested in purchasing
fractional interests and lending institutions are not likely to
lend money to holders of fractional interests.
(2) Problems arise concerning the management of undivided
interest properties. There is a tendency for persons who own
partial interests in property to expend less time and money than
they would have spent on solely owned property, resulting in some
amount of mismanagement.
(3) Louisiana fractional interest holders with less than an
80-percent interest lack control over the use of the timber
without consent of the other owners.
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