CCRC Equity Membersip appreciation?

[ocean view]

DM recently passed and we are starting to deal with her estate. For the past 33 years she has lived in a Type C CCRC in Sacramento. My parents purchased an equity membership for $195k at that time (1992). Dad passed long ago. DM was the surviving owner.

We are trying to determine the appropriate price to list the sale of her membership/apartment.

The CCRC management insist that we should not expect this investment to appreciate like real estate or any other capital investment. They suggest that we should list at $325k - $350. We would be okay to have net proceeds in this range, but the CCRC skims a transfer fee off the top. At a 350k price, the transfer fee is $97k.

Does anyone have experience with this type of transaction? Are we nuts to expect her investment to double or triple in value (before deducting the fee) over 3 decades?

She was the most tenured resident, so we don’t know how others may have grown over a similar time period. Her apartment, to which the value of the membership is tied, is unique, only 11 units of 250 with her floor plan. The last one sold in 2023 for $250k, but at that time there were 30+ units of all types also for sale.

I guess my question is - what type of return, if any, should we expect?

 

[Koolau]

No idea how to answer your question but I would push back on that ridiculous "transfer fee." For that kind of money, I'd consider legal representation (lawyer.) Perhaps it's contractual and you're stuck with it, but it seems totally without any reasonable excuse. Good luck.

 

[braumeister]

If you have access to old records, I would look at the average entrance fee for that floor plan when she bought it, and the same average entrance fee for the last few sold. The difference should give you a reasonable way to price your sale.