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The valuation approaches in eminent domain cases

On Behalf of | Mar 13, 2020 | Eminent Domain |

If you’re in the process of exercising eminent domain, then you need to know the law and how to use it to your advantage. This is especially true when it comes to addressing matters related to just compensation, where one bad move could cost you or your agency A significant amount.

One way to approach just compensations negotiations confidently is to have a valuation approach that is fair but favorable. Generally speaking, there are three valuation approaches utilized in eminent domain cases. The first is the market approach. Here, the land in question is valued based on comparable sales in the area. This type of approach is most apt when dealing with residential properties because it provides for easy comparison.

The second valuation approach is the income approach. With this strategy, a property that has been utilized to generate revenue is analyzed to try to determine what the property’s current value is in light of expected future revenues. This means looking at current income and using capitalization rates to reach a forecasted number.

The third approach applies to properties that are unique in some one, in that taking the land would require the property owner to spend money to rebuild what was taken. With this approach, the government will have to pay for the cost of the underlying land without the unique structure on it in addition to the cost of rebuilding that structure somewhere else.

Oftentimes in eminent domain negotiations, the parties pursue different approaches or their calculations differ significantly. Therefore, in additional to having an expert support your position, you need to know how to negotiate without fear of taking the matter to litigation. This is the best way to ensure that you reach an outcome that is favorable to you and allows you to expeditiously achieve your goals. To learn more about how best to approach your specific set of circumstances, consider reaching out to a legal professional you trust.


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