Biersdorf & Associates

Why Act Now

Gave Away the Farm

As part of a highway reconstruction project, the State planned to acquire a parcel of property which contained a residential dwelling. The dwelling was of modest design and situated on a 17-acre parcel of land. The property was located in an area of increasing development at the intersection of the reconstructed highway and a county road. All of the property fronting the highway in this area was destined for commercial development within the very near future. The State offered to acquire the entire parcel for $110,000 based upon an appraisal comparing sales of other homes. This included a premium for the extra land which accompanied the home.

Although the owner of the 17-acre parcel used it as a residence (and the State valued it that way), it was ideally located for a commercial property. Any purchaser would have torn the house down and built a commercial building on the site. All that was required was an easily obtainable change to commercial zoning. During the time of this offer, the State had also valued an unimproved, commercial land parcel in excess of $70,000 per acre. The similarities between this parcel and the 17 acre parcel were astounding:

1) similar commercial potential,
2) on the same highway,
3) both at intersections with county roads, and
4) only a couple of miles apart.

The State chose to ignore these similarities when making its offer for the 17-acre parcel because the formal zoning change had not occurred. This was contrary to the law, though. The courts had stated that, where a zoning change is reasonably likely to occur, property value should be established assuming such a change. The State did not do that. Since the owner of the 17-acre parcel didn’t know the law, he accepted the State’s offer – and lost over $200,000 by doing so.

Hiring the Wrong Appraiser

An owner of a small apartment building inquired whether his offer from the State was a fair one for his property. After analyzing the offer, it was determined that the State’s appraiser had made assumptions about the property’s income that incorrectly reflected market conditions. As a result the offer appeared to be 20 to 25 percent below what the property was really worth.

Approximately 6 months later the same property owner called again. Now, though, his voice had a tone of desperation. Upon questioning he revealed that he had taken matters into his own hands with disastrous results. He had hired an appraiser to value his property without inquiring whether the appraiser really knew how to incorporate the highest and best use rules of eminent domain in his report. His appraiser produced a report which valued his apartment building even less than the offer from the State. To make matters worse, this new appraisal had been delivered this new appraisal to the State. He asked what could be done.

After reviewing his new appraisal report, we discovered that that appraiser made the same mistakes in his analysis that were made by the State. Since this new report had already been given to the State, it could now be used against the owner. The owner was told that it was no longer possible to obtain the additional damages he should have received. The lesson to be learned from this example is that selecting an appraiser is an extremely important decision in the development of a condemnation claim, and acting on your own can ruin a good claim.