In this post my friend and University of Chicago classmate, Vernon Martin, provides insights into the work he does for American clients with estates that have overseas real estate holdings. Vernon Martin has more than four decades of commercial appraisal experience and has appraised properties on six continents. A former chief commercial appraiser at three national lending institutions and an adjunct professor at California State University, Los Angeles, he has authored numerous professional articles and two books. He holds degrees from the University of Chicago and Southern Methodist University (MSRE) and is a Certified General Appraiser in multiple states.
As with all content on this website, this article is educational in nature, and is not to be relied upon as legal advice.
Appraising Foreign Real Estate for U.S. Estates
In my work as a commercial appraiser, I’m often asked to value properties located outside the United States for use in U.S. estate matters. At first glance, it might seem unusual to send an American appraiser overseas. But in many cases, there are sound reasons for doing so.
Why Hire an American Appraiser for Foreign Property?
Litigation needs
In estate disputes, attorneys often want an appraiser who can testify in U.S. court, in American English, and under U.S. appraisal standards—most commonly USPAP (Uniform Standards of Professional Appraisal Practice). This ensures the valuation meets the evidentiary and procedural requirements of the American legal system.
Tax compliance
For federal estate tax purposes, the IRS requires that valuations be performed by a “qualified appraiser.” While that definition does not exclude foreign professionals, many clients prefer an American appraiser familiar with U.S. tax law. Another practical barrier is that foreign appraisers must include a U.S. Tax Identification Number in their report—something many simply do not have.
Real-World Assignments
Here are a few examples:
- Corporate campus in Lima, Peru – Appraised for an estate that bequeathed the property to the Church of Jesus Christ of Latter-day Saints.
- Office building in Seoul, Korea – Involved a family dispute in Orange County, California. My assignment required reviewing a Korean-language appraisal, which I cross-checked against Seoul Municipal Government sales data—using Google Translate.
- Partial interest in a Gangnam high-rise – Valued a 43% ownership stake, applying a partial interest discount to account for factors such as market risk, property condition, and lack of control. Smaller ownership shares, especially below 50%, typically require steeper discounts due to limited liquidity and decision-making power.
- Key discount factors included:
- Market risk (e.g., vacancy rates)
- Earnings stability
- Property condition and remaining life
- Growth potential
- Asset diversification
- Management quality
- Size of ownership share
- Control limitations
- Liquidity
- Key discount factors included:
A Lesson in Estate Division: German Example
One German decedent split ownership of four rental properties evenly between his sister in Germany and his daughter in the U.S. The result was two heirs holding fractional interests in multiple properties—across two continents.
This approach significantly reduced value. My analysis showed that if the daughter had instead received three entire apartment buildings plus a 25% share of an office building, her total value would have been €2,787,000 rather than €2,270,000—a 23% increase. This underscores the importance of thoughtful estate planning, especially with real estate, so each heir can receive whole, marketable interests.
Contact: 1-323-788-1605 | vernonmartin@aol.com
