Eminent domain appraisals

How do you assign fair value to a property, or a piece of a property? That’s what an appraisal is for, but they’re not all created equal.

Eminent domain appraisal – where GDOT gets its numbers and how to fight for more compensation

The Georgia Department of Transportation (GDOT) has come knocking. A project is going through your area, and they’re planning to take some or all of your property. It’s a nightmare scenario. On top of that, their offer for your property is just too low. What can you do?

Fight. Arm yourself by understanding eminent domain law, appraisals, how they work, and how you can argue for more money for your property.

Who determines just compensation for my property?

Typically, just compensation means fair market value for the property. The trouble is, your property isn’t going on the market – GDOT is taking it and offering you compensation. Furthermore, once GDOT has your property in its sights, the market value changes! Who wants to buy a property if they’re only going to lose some or all of it?

This is the tricky path the law attempts to travel to compensate property owners. As such, it includes definitions of “just compensation” and “fair market value.”

A home appraiser working on calculations with a contract and blueprints.

What is just compensation and what does it include?

GDOT’s policies and procedures governing eminent domain appraisers provide the answer. The state defines just compensation as “An amount of compensation to be received by a party for the taking of the whole or taking of a portion of their property under the powers of eminent domain, as granted by the Fifth Amendment to the United States Constitution.”

The eminent domain reference is in the last line of the Fifth Amendment, which says that the government can’t seize private property for public use without just compensation. 

The guide goes on to include in that compensation, “damages, or offsetting special/specific benefits plus additional costs such as moving expenses, reestablishment expenses, replacement housing differentials, or rental unit differentials requiring supplemental payments.”

 Contact us as soon as you know they’re taking your property.

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What is fair market value and how is it determined?

In simple terms, fair market value is what someone would be willing to pay for your property on the open market, with no ulterior motives or abnormal conditions. Georgia defines it much more precisely. According to the state’s policies and procedures, fair market value is:

“The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus.”

It further assumes the following to be true in a fair market value transaction:

  • Buyer and seller are typically motivated. 
  • Both parties are well-informed or well-advised and act in their own best interests. 
  • A reasonable time is allowed for exposure in the open market. 
  • Payment is made in terms of U.S. Dollars or financial arrangements comparable thereto (like a mortgage). 
  • Price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

Now you know what the law says you’re entitled to: just compensation in the form of fair market value and specified expenses related to taking your property. So how does one calculate the fair market value of a property that’s not going on the market? Enter the eminent domain appraiser.

It's assumed that everyone is motivated and well-informed in a fair market value transaction.

Appraisals and how value is determined in an eminent domain taking

Most people have heard of an appraisal – the process by which the value of a property is determined. Here are some things to keep in mind as you navigate the eminent domain process:

Check Boxes

An appraisal is very different from a competitive market analysis or a tax assessment.
Many people think that a real estate broker’s competitive market analysis (CMA – also known as a broker price opinion) is as good as an appraisal. They are very different things. A broker renders an opinion on the likely sale price of a property, usually within a range. An appraiser is assigning a value. A tax assessment is just that, and tax values are typically not accurate indicators of property value.

License

Appraisers are licensed professionals, but they can have very different opinions.
Appraisers are highly trained and regulated. There are specific methodologies they must use when performing appraisals. However, there is human judgment involved. Thus, even though they all use the same methods, they can arrive at different conclusions regarding value.

Uneven Scales

All appraisals (and appraisers) are not created equal.
Eminent domain appraisals are different from a typical residential appraisal because they must consider additional factors to arrive at a valuation. What is the land’s highest and best use, for instance? And the state’s guidelines require a certain amount of experience before an appraiser is allowed to work on certain types of projects. Even if you want to hire an appraiser, how do you know which one to hire?

How does an eminent domain appraisal work in Georgia?

There are several phases to consider. Appraising a property is complicated and incorporates three different approaches the appraiser can use to arrive at a value. Furthermore, in Georgia, an eminent domain appraisal is a five-step process.

So what exactly is an appraisal?

In simple terms, an appraisal is simply an estimate of something’s value (or the act of finding that value). Valuing property is problematic because it attempts to analyze sometimes-incongruent factors like the current market climate and property rights buried in centuries of common law.

There are three approaches an appraiser can use to arrive at an eminent domain valuation.

  • The Cost Approach
    Essentially, the appraiser figures out what the improvements – such as a home or office building – would cost to build and then adds the value of the land. 
  • The Sales Comparison Approach
    The most common way of valuing residences, this approach uses recent sales of similar properties in the area to determine value. It is commonly used to value homes but may not be the best way to ascertain value in an eminent domain taking.
  • The Income Approach
    This approach is used to value income-producing properties. It bases the value of the property on the income an investor could earn.

An eminent domain appraiser might need to use all three approaches, depending on the property in question. Each has its particular requirements, formulas, and calculations.

Highest and best use – finding the most value in your property

When dealing with “real property” – land – appraisers consider an essential factor called “highest and best use.” If the property is not being put to its “highest and best use,” its value is not maximized. For example, if your residential property borders a busy road, its highest and best use may be commercial, not residential. There are four considerations to highest and best use:

  • Physical possibility – Can the land be used in a better way? Parcel shape, soil type, topography, and other factors are considered.
  • Legally permitted – Once what is possible is defined, the appraiser must determine if a better use is legal considering zoning, setbacks, deed restrictions, and other factors.
  • Financial feasibility – If it’s possible and legal to put the land to better use, is it financially feasible to do so? This involves a great many different analyses and can and has filled many books.
  • Maximum productivity – With all prior factors considered, is this use maximizing the property’s productivity? This balances projected results from the previous considerations against the risks of achieving those results.
A yellow rezoning traffic sign next to an orange cone on the sidewalk.

The five steps of an eminent domain appraisal in Georgia

Eminent domain appraisers follow a five-step process in Georgia. They are:

STEP 1: State an opinion of the property’s value before any part is taken. The appraiser must evaluate the property’s value and ignore the part being taken. 

STEP 2: State an opinion of the value of the property being taken, including the land and improvements. With a total value stated in step one, the appraiser determines the value of what the government is taking.

STEP 3: State an opinion on the value of the remaining property before the taking. Subtract Step 2’s number from Step 1’s number.

STEP 4: State an opinion on the value of the remaining property after the taking with negative impacts. This number takes into consideration the adverse effects of the taking. Subtract this number from Step 3’s to determine consequential damages.

STEP 5: State an opinion of the value of the remaining property after the taking with positive impacts. What if the taking improves the remaining property’s value? It’s not impossible. Subtract this number from Step 3’s to determine consequential benefits (if any).

As you can see, an appraiser isn’t simply arriving at one number. There are several different levels of analysis used. It’s a complex process, and appraisers are only human. They can make mistakes at any point in an appraisal. It’s a good thing we can look at GDOT’s appraisal to find them, right? Wrong.

GDOT is NOT required to share its condemnation appraisal of your property!

They won’t tell you if the property you have left conforms to zoning or setback requirements. Sometimes, an experienced eminent domain attorney can access the appraisal, and we certainly work to discover any future problems caused by GDOT’s taking. That’s why it’s imperative to have an advocate with knowledge of the process fighting for your best interests!

Appraisers can make mistakes

Appraisers are only human. Some examples of mistakes that can show up in appraisals are:

  • Poor choices of comparable properties
  • Sales that are not arm’s length transactions
  • Future development potential
  • Setback violations
  • Zoning issues
  • Incorrect highest and best use
  • Omission of information
  • Incorrect calculation of damages or costs requisite to the taking
  • Mathematical mistakes in valuation formulae
  • Using the incorrect approach to value your property

Should I tell GDOT how much I think my property is worth?

We do not advise that you share your opinion of your property’s value with a condemning agency like GDOT. You may risk damaging your chances for more compensation down the road. 

Let’s say GDOT comes and makes an offer for $100,000. You tell the right-of-way agent that you think your property is worth at least $125,000. They disagree, and you hire an attorney. The research and analyses from the attorney indicate your property is worth $250,000, but the right of way attorney uses your own words against you. You could be stuck with half of what your property is worth in this example.

We advise you to disagree with GDOT’s offer and then let an experienced eminent domain attorney do the fighting for you! The original offer is the minimum you can receive, but it’s also the maximum if you accept it without fighting!

A couple consulting with an attorney in a bright office setting.

Can I challenge the appraised value of my property?

Yes, you can challenge the appraisal by declining GDOT’s offer and building a case for more compensation. This involves a few things you should be aware of:

  • You have to file a response to GDOT’s offer within 30 days. If you don’t respond, you may lose your right to challenge the amount and fight for more compensation. Any time improvements – like buildings or parking lots – are taken, it’s vital to know that the money GDOT is offering is enough to pay for work you’ll need to do after GDOT is gone.
  • You need the right professional analysis. An experienced eminent domain attorney knows which appraiser to call for a given property or circumstance, for example. Perhaps a proposed driveway profile doesn’t work for you, or the road elevation will have a negative impact that’s not being considered. Hiring the right expert can make all the difference.
  • You will probably never get to see GDOT’s appraisal. The state is not required to share it. Sometimes, we can get a copy of it. However, most of the time, we’ll be conducting our own analysis of the property to argue for more compensation on your behalf.

Should I hire my own eminent domain appraiser?

It’s probably not in your best interests to hire your own eminent domain appraiser unless you know the right appraiser to hire. Does the appraiser have experience and knowledge of the area and its projects? Eminent domain appraisal can be an entirely different animal. 

And here’s a secret – call us first. We’ll evaluate your case at no cost, and if we take your case, we’ll front the cost of the appraisal. If we can’t get you more than GDOT’s original offer, you pay nothing, including the appraisal cost. That’s part of our no-fee guarantee.2

Can an eminent domain attorney help with the appraisal process?

It’s probably best to let an attorney handle the appraisal process entirely. Not only will it reduce the stress and time you invest, we know who to call and what aspects to focus on to seek maximum compensation. By hiring an eminent domain attorney, you’re delegating eminent domain tasks to eminent domain professionals.

Eminent domain is all we do, and we never represent GDOT – ever

Some eminent domain attorneys in Georgia may represent property owners or GDOT. It makes no difference to them. It does to us. We only represent property owners.

Get a free case evaluation

In our experience, GDOT’s first offer is low. Your property may be worth much more! Since our firm started, we’ve been able to increase the DOT’s initial offer to our clients by an average of more than 202%.1

Get a free case
evaluation today.

There are only a handful of attorneys in GA who practice eminent domain exclusively. And even fewer with DOT experience. That’s why it’s always worth it to get a free case evaluation.

Here’s how it works:

1) Tell us about your situation.

2) We research your property as needed, using DOT maps, our own technology, and experience to see the exact effects.

3) We let you know what we think a fair offer would be. This evaluation is free, and there’s no
pressure or obligation to hire us after.

But please don’t wait to act. Waiting can hurt your case, and the cost is the same: free.

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