This is definitely a very important question & one that involves a significant amount of research as you want to recognize the full value of the property. Before reaching a specific sale price you need to gain a strong understanding of the market. More specifically, the sale prices of similar properties as well as a keen understanding of the value of the differences of your property vs. those similar properties.

Valuation of Inherited Property
I’m wondering when you received the property, because when you inherit property the fair market value is assessed at the date of the death. If it was fairly recent then that value may be used as a starting point, but be sure you are comfortable with the valuation method used. If the deceased passed away a long time ago, then the valuation probably wouldn’t be so relevant.

Analyzing the Market
A method that many sellers use to gauge the value of their property is to look at the sale prices for similar properties in the area. So, if there is another rental property that is similar to what you own that was recently sold, you can use that price as a starting point.

Reviewing the Income Generated
There is also a valuation tool called the gross rent multiplier (GRM) which is used to figure out a sale price by comparing it to a similar property with rental income. Specifically, compare your rental income by a comparison factor, or the monthly rental income and actual sales prices of comparable properties that were recently sold in the area. For instance, if a similar property generated $5,000 in rent a month & was sold at $1,000,000, the rent/sale multiplier would be 200 ($1,000,000/5,000=200). So, if your family’s property was rented for $15,000, then the estimated sale price would be 3,000,000 ($15,000*200=3,000,000).

Separately, make sure you consult with an estate tax expert because these situations can become complicated & you will want to make sure that you put yourself in the best possible position from a tax standpoint as well.

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