Eminent domain is the power of the government to take private property for public use. This can be a contentious issue, as it can often feel like the government is taking away the rights of private citizens. For this reason, an accurate real estate appraisal is essential to ensuring that owners receive fair compensation for the property taken.

When appraising your property, you need three key components to assess its fair market value. These three components are necessary for your appraisal to be accurate and get the most out of your eminent domain appraisal.

This blog post will discuss these three components and why they are essential for a successful appraisal.

An Understanding of the Eminent Domain Law

By definition, eminent domain is the right of the government to acquire private property for public use. This right is exercised when the government needs to use a specific piece of land to build a park, highway, or school.

Understanding the relevant laws and regulations surrounding eminent domain is a critical first step for any appraisal. This includes familiarizing yourself with local laws and regulations that dictate how eminent domain is used and any applicable national laws.

Appraisers need to understand this law to help protect the owner from being taken advantage of by the government. An understanding of eminent domain can also help the appraiser determine the property’s fair market value, taking into account any potential changes that may result from the exercise of eminent domain.

Knowing these legal considerations will help ensure the appraisal is done correctly and accurately.

The Property’s Estimated Value

If you are looking to file an eminent domain claim, the next important thing to prepare is a reliable appraisal of the property in question. The property’s value is integral in determining the compensation you may be entitled to.

Here are three key elements that appraisers consider when getting an estimated value of the property:

• Highest and Best Use: The highest and best use of the property is a legal term that refers to the most profitable or advantageous use of a property. This determination is based on how the property is used at present, or potentially used, based on its existing zoning and other laws that may affect how it can be used. The appraiser must consider whether or not any impediments could prevent its highest and best use from being realized, such as environmental concerns or existing restrictions.
• Market Value: This is the value determined by the real estate market, which includes what buyers and sellers are willing to pay for a particular property in its current condition. The appraiser must consider the supply and demand of similar properties in the area to determine a realistic market value.
• Appraisal Methodology: The appraiser will consider all relevant factors when appraising the property, including the size, condition, location, utilities, and other features that might impact its value. Different appraisal methods may be used, such as the cost approach, sales comparison approach, or income capitalization approach. The appraiser will then select the appropriate method and provide a comprehensive report with their analysis and conclusion.

Multiple Factors Contribute to Estimating Market Value

These three elements – highest and best use, market value, and appraisal methodology – will all play a critical role in determining how much compensation the property owner may be entitled to. However, even though these three pieces of information are essential to having a successful eminent domain case, they’re not the only ones.

Any evidence of economic losses must be collected to receive compensation for your damages. For example, suppose the development displaces your business due to increased traffic and congestion from construction activity near your building. In that case, you will want documentation showing lost revenue associated with this.

Other sources of evidence include comparable transactions within a specific radius of your land, specifically those outside the project boundaries who were affected by the project but who did not sell or move away or government permits related to road closures or construction projects in your area over time.

Documentation is Essential With an Appraisal

Having the right documents on hand is also essential in the appraisal process. This includes documents such as deed records, property tax records, past appraisals, surveys, and more.

Here are some standard documents you need to prepare:

• HOA information
• Copies of past appraisals
• Sketches
• List of recent improvements and renovations that have increased value
• Property tax records
• Documents to support any infrastructure extension that has been added since the house was bought

These documents can help the appraiser accurately assess the property’s value and ensure the owner is fairly compensated. It is worth noting that the documents required for an eminent domain property appraisal may vary from state to state, so check with local authorities to ensure all the necessary documents are collected and prepared.

Wrapping Up Eminent Domain Appraisals

Eminent domain appraisals are a crucial part of the process when the government considers seizing private property for public use. If you’re a homeowner facing the possibility of your property being taken, it’s essential to understand what you need for an eminent domain appraisal.

Hopefully, we have covered everything there is to know about eminent domain appraisal and how you make sure you’re getting the compensation you deserve.

About the Author: The above article on eminent domain appraisals was written by Leslie Fields. Leslie is the Executive Director of Owners’ Counsel of America. Before retirement in 2014, Leslie practiced law for 33 years, mainly with Faegre Baker Daniels (now Faegre Drinker), a law firm with national and international offices.

While at Faegre, Leslie served on the firm’s Management Board and became a renowned legal expert on eminent domain and property rights issues, co-chairing for many years the national ALI-CLE Eminent Domain and Land Valuation and Litigation Conference and presenting on the subject of eminent domain in locales as distant as Tsinghua University in Beijing China as part of the Brigham Kanner Property Rights conference sponsored by William & Mary Law School.

During much of this time, Leslie served as a Colorado member of OCA and wrote the definitive textbook on Eminent Domain Law in Colorado. Leslie came out of retirement in 2017 to help lead OCA in its mission of helping private landowners in eminent domain and takings situations across the country.