Eminent Domain

What factors will the appraiser consider when determining my property's fair market value?

By Brian Farkas, Attorney
The Fifth Amendment to the United States Constitution, as well as similar language in state constitutions and legislation, require that the government must pay you "just compensation" in exchange for taking your land. But how does one define "just compensation"?

The Fifth Amendment to the United States Constitution, as well as similar language in state constitutions and legislation, require that the government must pay you "just compensation" in exchange for taking your land.

How does one define "just compensation"? If you love your home, the property's value is more than monetary. Its value includes the memories you have created there with your family, or the unique spirit, character, and sense of place.

Unfortunately, a property appraiser will not consider such subjective criteria. Instead, the appraiser--typically a real estate professional who is licensed by your state--will evaluate the monetary value of your property based upon more objective factors.

Specifically, the appraiser will be concerned with the property's fair market value. He or she will likely consider the average prices per square foot of land in your neighborhood. (Obviously, a square foot of property in the middle of Manhattan would be worth far more than a square foot in the middle of Montana, where land is more plentiful).

An appraiser would also consider any natural resources specific to your land that increases its value. For example, a parcel of land sitting on top of an oil reserve, or with a stream, might have additional value beyond a parcel of land without those natural resources.

If your property contains other amenities that are not natural, such as a swimming pool, this would also increases its market value.

Most appraisers would also do research on the value of recent sales of similar pieces of property in the same region. For example, if ten parcels of land in your area, similar to yours in size and condition, sold for an average of $250,000 over the course of the past five years, this could give a reasonable basis for what qualifies as "just compensation."

In a taking situation, the one thing that the government will obviously not do is to place the home on the open market and actually test the appraiser's determination of value--which is to say that, as much as they try to standardize this process, appraisers can be off base.

Go to the main eminent domain FAQ page.

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