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Challenges in Valuing Properties: Assessing Fair Compensation in Eminent Domain

The U.S. Constitution, through the Takings Clause of the Fifth Amendment, prohibits the government from taking private property for public use unless it pays the property owner just compensation.  However, determining an appropriate value for real estate can be rather challenging, and in many eminent domain cases, it can be highly disputed.

Importance of Accurate Property Valuation

In eminent domain cases, the offer made to the property owner reflects the value determined by an appraiser hired by the government authority.  In many cases, this value determination may not be accurate.  There are a lot of gray areas when dealing with eminent domain and the government’s methodology of determining the appropriate value may be skewed in their favor.  The appraisal process is critical to receiving fair compensation for the property.

The Difficulty of Valuing Unique Properties

In general, there are three valuation approaches utilized in eminent domain cases.  The first is the market approach (valued based on comparable sales in the area), the second is the income approach (valued on expected future revenues) and the third applies to unique properties.  In this situation, it would require the property owner to rebuild what was taken.  In this type of valuation, the government would have to pay for the value of the underlying land without the unique structures on it, in addition to the cost of rebuilding those structures somewhere else.

Getting to a fair and accurate number can be difficult with unique properties because of the complexity of the valuation and appraisal process.  This is where hiring a knowledgeable appraiser with eminent domain experience is critical.

Role of Appraisers in the Process

Property owners can exercise their right to another appraisal if they believe the appraisal from the government is too low.  Since eminent domain cases are not typical, many appraisers will not be appropriate for the job.  Eminent domain appraisals must comply with special rules, procedures, standards, and laws when evaluating properties. 

It is critical that the appraiser understands how to evaluate and determine severance damages.  This value determination directly affects the amount of compensation the property owner will receive and it is unlikely the property owner will get a second chance if this appraisal is done incorrectly.

An expert appraiser will research your individual case to determine whether it is advisable to accept the government’s offer or whether you should counter the offer.  However, finding the right appraiser is not always easy.  An expert appraiser should have vast experience with eminent domain cases.  They should be resourceful and be qualified to testify in court if needed.  The appraiser should also have experience with the type of property taken and be able to write a comprehensible appraisal report.

Impact of Market Fluctuations on Valuation

The government is required to pay fair market value at the time of the case.  In other words, the equivalent compensation was what a willing buyer would pay in cash to a willing seller at the time of the taking.  Market fluctuations could potentially hurt or help a property owner, but there can be an argument made that a willing seller would not sell his property during a depressed market.  This is when a knowledgeable appraiser could make a significant difference in your case.

Strategies for Fair Compensation Assessment

While it is very difficult to defeat the government from taking land in eminent domain cases, fair compensation for that property can be negotiated.  Many government agencies will lowball their initial appraisals.  If you are faced with eminent domain, you should get counsel from a savvy real estate attorney before you make your next move.  They will help you devise a strategy that ensures fair restitution for the sacrifice of your asset.

I Will Fight For You!

I’m Rob Robinson, and I understand how stressful it can be when a government agency attempts to take your private property.  I will ensure that you are treated justly and your legal rights are protected.  When it comes to eminent domain, the government is playing in its own sandbox.  They know what the rules are.  They know how the rules affect them and how the rules affect you.  They are counting on you to make mistakes that can weaken your case.

It is important to know, even if the government has the right to take your property, it cannot dictate the price they are willing to pay.  Your compensation is determined by the highest and best-use laws for your property.  Unfortunately, it is not uncommon for property owners to be intimidated, manipulated, and poorly compensated to give up their land.

I have the experience necessary to identify damages that lead to a higher amount of compensation, and I will interface with the appropriate authority and work on your behalf to help you obtain just compensation.  I can also take your case to trial if negotiations cannot be reached.

If you have questions about eminent domain law, please contact my office as soon as possible.

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