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terms of each purchase, the property rights conveyed, the conditions of the sale, expenditures made shortly after the purchase, and market conditions. based on the financing used by the purchaser of the property and the market conditions on the date of the properties' sale. This is because property values fluctuate with supply and demand which is influenced by, among other things, shifts in financial markets and mortgage interest rates. When mortgage interest rates are high, there is less demand in the property market and properties sells for less than they would in a favorable market.
138:, the highest and best use of the property must be reasonably probable considering the property's physical characteristics, the land regulations and laws affecting the property (including the possibility of changing those regulations and laws), and must be financially feasible. Appraisers traditionally analyze alternative uses to a property to determine its highest and best use with the following criteria in descending order:
229:
property that have recently sold, are listed for sale, or are under contract (i.e., for which purchase offers and a deposit have been recently submitted)." The appraiser makes valuation adjustments to the valuation of the condemned property based on the similarities and differences of properties that recently sold. The adjustments made by each side's appraiser is one of the greatest contentions in the eminent domain trial.
67:
value is defined as the highest price obtainable in the open market with the value not being influenced by the imminence of the eminent domain taking. In other words, the property must be valued as if the project for which it is being taken did not exist — this is known as the "project influence" doctrine.
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costs of demolishing and replacing the existing structures on the property as well as other expenses such as permitting fees. The appraiser then estimates the amount of net income that the new use of the property could generate and whether that net income would pay for the changes made to the property.
244:
The adjustments on various characteristics of the properties can result in large differences in the valuation of any given comparables and the property being condemned. But the general standard is for the adjustments to affect the valuation of the subject property by no more than 15 to 25 percent, as
219:
In a typical assignment, an appraiser for a party in an eminent domain case uses all three methods and then determine which one most appropriately calculates the fair market value of the subject property. However, there are limitations for the use of each methodology. The cost approach cannot be used
164:
To determine the financial feasibility of the project, appraisers look at the supply and demand in the area for the land use (e.g., if the highest and best use may be a gas station, the appraiser would look to see how many gas stations were located near the property). The appraiser also estimates the
261:
The income capitalization approach "typically provides reliable indications of value for income producing properties." Using this approach, appraisers try to determine the property's market value by analyzing its capability to produce income. However, the evidence of income that the appraiser relies
53:
as the measure of just compensation. The primary evidence of fair market value in almost all eminent domain are appraisal reports created by the appraisers hired by both sides. Because of the difficulty in stopping the eminent domain process, and the sole issue typically being what just compensation
257:
The cost approach is most applicable when the condemned property is specifically designed for a certain use and there are not comparable properties that can be used in the comparison sales method. Using this approach, the appraiser values the property by determining "how much it would cost to build
248:
In eminent domain cases, depending on the jurisdiction, the data collected on sales of similar properties may be admitted as direct evidence and/or as support for the appraiser's testimony. The party offering the comparative sales has the burden of proving that the properties are similar to the one
232:
The adjustments made are both quantitative and qualitative. Appraisers use several statistical or data analysis techniques to make the quantitative adjustments such as: variants of sensitivity analysis (e.g., paired or grouped data analysis), trend analysis, scenario analysis, and capitalization of
146:
The legal permissibility criterion looks at how the property is zoned, building codes, private restrictions such as restrictive covenants or conservation easements, historic preservation district controls, and environmental regulations. All of which may preclude many potential land uses. Appraisers
110:
Because eminent domain is difficult to prevent, in almost all eminent domain cases, the only issue to be determined at trial is the just compensation owed to the landowner and which party's appraisal of the condemned property is more credible. Accordingly, an eminent domain trial is often seen as a
41:
Usually, the government files an eminent domain action to take private property for public use and just compensation is determined at trial if the landowner does not settle with the government. However, when the government fails to file an eminent domain action and pay for the taking, the owner may
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title, or for appraising the just compensation owed to landowners in jurisdictions with protections in their state constitutions that require just compensation be paid to landowners when the government "damages" their property. For these reasons, appraisers may create hybrid or novel approaches to
236:
Appraisers typically first make financial adjustments between the sales of the comparables and the property being condemned. However, they are not required to do so if their analysis of the data they have collected indicate otherwise. The first five adjustments typically made are for the financing
78:
49) and its state counterparts. The judicial denial of compensation for business losses inflicted when a business conducted on the taken land is destroyed by the taking, has been the subject of much controversy and severe criticism by legal commentators. Nonetheless, only one state (Alaska) allows
130:
The highest and best use of the property is often the most important factor in determining the fair market value of land being taken by condemnation. It is defined as "the reasonably probable use of property that results in the highest value." The determination of the highest and best use for the
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as the most probable price, in terms of cash that would be paid by a willing buyer to a willing seller, each being fully informed of the property's good and bad features, with the property being exposed on the market for an adequate time to attract offers. But in eminent domain cases, fair market
228:
The sales comparison approach is the preferred approach by most courts in the determination of the fair market value of property. It is also the most widely used for residential property. With this approach, "an opinion of market value is developed by comparing properties similar to the subject
173:
At the end of the analysis, the appraiser performs a comparative analysis of all financially feasible uses to determine which of the uses is the most profitable. The use that is the most profitable and satisfies the other three criterion is the highest and best use of the property.
155:
The physical possibility criterion looks at the properties size, shape, topography, the soils on the property, whether utilities are available, access to the property via roads and other means, and other environmental considerations such as the presence of wetlands or floodplains.
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After the financial adjustments are made, the appraiser typically makes what are called the "property adjustments." These adjustments are for: "location, physical characteristics, economic characteristics, legal characteristics, and non-realty components."
111:"battle of appraisers" because appraisals, as expressions of opinion, can vary dramatically for any given property. Although their valuations may be different, the appraisers for the condemnor and the condemnee both follow the same three-step process:
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use in their appraisals for an eminent domain (or inverse condemnation) case. However, the admissibility of their opinions based on these methodologies is subject to jurisdictional rules of evidence on expert witness testimony.
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being condemned (e.g., the properties have the same highest and best use, the date of sale was recent but not before the condemnation action was filed, the properties are located within economic proximity to each other, etc.).
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The traditional three appraisal methodologies are not always suited for establishing the just compensation owed to a landowner. Those methodologies alone may be ill-suited to appraise unique property interests that are not
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Market value does not include incidental losses (e.g., cost of moving, loss of business goodwill, etc.), but some of these losses are made compensable in part by statutes, such as the federal
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Market value is the prevailing, but not exclusive measure of determining the just compensation owed to a landowner under the Fifth
Amendment. Fair Market Value is defined by
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Determine which appraisal methodology is most appropriate to use given the characteristics of the property or whether the appraiser should use more than one methodology; and
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to appraise the value of vacant land and the sales comparison approach cannot be used to appraise unique/specialized properties such as a municipal garden or power plant.
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There are three traditional methodologies used by appraisers for determining the value of property and therefore the just compensation owed. These methodologies are:
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also consider the reasonable possibility of the property being rezoned by looking at other properties in the area and the municipality's comprehensive plan.
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it is mandated. Moreover, property owners are always entitled to receive interest on the just compensation owed to them if the payment is delayed.
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condemned property is the guidepost for an appraiser's determination of its value, dictating what methodologies they use in their appraisal.
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https://parkerpoe.azurewebsites.net/webfiles/ABA-Article-The-Case-for-Recovery-of-Business-Loss-in-the-Taking-of-Real-Property2.pdf
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otherwise the appraisal would be based more on appraiser opinion and not substantiated by the use of the data-based approach.
201:(comparing a property's characteristics with those of comparable properties that have recently sold in similar transactions).
550:
718:"Delineation of the intimate details of the backbone conformation of pyridine nucleotide coenzymes in aqueous solution"
468:"Why condemnors should pay property owners' attorney fees in eminent domain cases (and a 50-state survey on the issue)"
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by the government. Under some state constitutions, it is also owed when the government "damages" private property.
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449:
Christian
Torgrimson & Angela Robinson, Condemning, Zoning & Land Use Litigation Section of the ABA,
215:(consists of methods, techniques, and mathematical procedures used to analyze a property’s income-earning).
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Come to an opinion on the fair market value of the property based on the methodology or methodologies used.
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383:"Tips for Evaluating the Impact of Required Dedications on Valuation in Eminent Domain Takings"
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upon must be attributable to the property itself and not the business located on the property.
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is owed to a landowner, an eminent domain trial is often called a "battle of the appraisers."
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Determine the highest and best use of the property before determining the property's value;
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608:"How 'Highest and Best Use' Can Substantially Impact Just Compensation for Landowners"
208:(a comparison of the replacement cost of the structures/improvements on the property).
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424:"Condemnation Damages Typically Do Not Include Payment for Business Losses"
502:"Interest Rates in Eminent Domain: Is 6% Just Compensation in a 12% World"
662:(15th ed.). Illinois: Appraisal Institute. 2020. pp. 305–334.
584:"Botetourt couple to get $ 3.1 million for condemned Exit 150 property"
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their recovery in all cases and so do a few others to varying degrees.
356:(2nd ed.). Chicago, Ill: Appraisal Inst. pp. 23–30, 105–120.
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Uniform
Relocation Assistance and Real Property Acquisition Act (1970)
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Determining the "highest and best use" of the property being condemned
451:
The Case for
Recovery of Business Loss in the Taking of Real Property
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30:(and counterpart state constitutions), which is invoked whenever
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and appraisers' fees may be paid by the condemnor. In
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Depending on the jurisdiction, the property owner's
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770:(3rd ed.). Chicago, IL: Appraisal Institute.
286:Fifth Amendment to the United States Constitution
49:For reasons of expedience, courts generally use
411:. Vol. 6A (3rd ed.). Matthew Bender.
8:
706:7 Nichols on Eminent Domain § G4.08 (2023)
688:4 Nichols on Eminent Domain § 13.01 (2023)
679:4 Nichols on Eminent Domain § 13.01 (2023)
551:"Post Office Acts to Acquire Airport Site"
539:4 Nichols on Eminent Domain § 13.01 (2023)
258:or replace a similar piece of property."
716:Bose, K. S.; Sarma, R. H. (1975-10-27).
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58:Estimating just compensation, generally
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354:Real Estate Valuation in Litigation
381:Brogan, Kevin (October 31, 2016).
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407:Sackman, Julius L. (2022). "34".
72:Uniform Relocation Assistance Act
582:Hammack, Laurence (2016-09-22).
506:Loyola of Los Angeles Law Review
422:Hull, Kandice (June 23, 2022).
453:(Winter 2011), retrieved from
253:The cost and income approaches
213:income capitalization approach
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366:: CS1 maint: date and year (
224:The sales comparison approach
734:10.1016/0006-291x(75)90482-9
660:The Appraisal of Real Estate
266:Nontraditional methodologies
22:is a right enshrined in the
500:Kaplan, Mark (1979-06-01).
76:Code of Federal Regulations
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798:American legal terminology
549:Kriss, Gary (1988-03-20).
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16:U.S. Fifth Amendment right
490:S.C. Code Ann. § 28-2-420
409:Nichols on Eminent Domain
199:sales comparison approach
189:Traditional methodologies
94:an award of such fees is
352:Eaton, James D. (1995).
307:Lindsay v. Commissioners
169:4. Maximum profitability
160:3. Financial feasibility
803:Takings Clause case law
428:The Legal Intelligencer
151:2. Physical possibility
142:1. Legal permissibility
766:Bell, Randall (2016).
301:Real estate appraisal
233:income differences.
184:Real estate appraisal
291:Inverse condemnation
178:Methods of valuation
44:inverse condemnation
768:Real estate damages
614:. December 19, 2017
136:Appraisal Institute
555:The New York Times
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134:According to the
51:fair market value
28:U.S. Constitution
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568:2023-09-22
512:(3): 721.
477:2023-09-22
433:2023-09-22
314:References
273:fee simple
182:See also:
106:Appraisals
88:California
84:attorneys'
64:appraisers
742:1090-2104
563:0362-4331
518:0147-9857
362:cite book
612:JD Supra
472:JD Supra
280:See also
92:New York
26:to the
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