How the Real Estate Market Impacts an Eminent Domain Case
Many people do not realize just how much the real estate market impacts the value of your home. In an eminent domain claim made by the government, they are required by law to pay you fair market value in order for them to acquire your property. That fair market value is a number that is often reached by relying on the real estate market and its current status. Let’s take a look at the two ways in which the market can impact an eminent domain case from a fair market value perspective.
Recent Home Sales in Your Area
The first way in which the real estate market can impact an eminent domain case is through its recent sales history. The trending of the real estate market could result in the fair market value of your property being higher or lower than you expected. Appraisers will often use the market method to come to what they believe the right value is. This requires them to go out and obtain recent sales information from your area. They’ll look for homes in the same vicinity as yours and with similar traits. This will include comparing square footage, the number of rooms, backyard area, and overall land area. Taking all of these things into account, they will look to find different homes that have sold recently.
The sales figures that the appraisers come up with are going to be used to basically average out and come to the fair market value of your home. If the real estate market is trending downward and a few homes recently sold for way below what you believe is fair, that is going to drive down the fair market value they come to. Vice versa, if the home around the corner ended up in a bidding war and it drove the price higher, that can help increase fair market value.
Value of the Land and Plot Sales
The other factor to consider beyond recent home sales is the value of the land that you sit on. Is the land your property resides on highly desirable? In the event that it is, this is going to drive up the fair market value of your property. Taking a look at recent sales data pertaining to sales of plots of land in your area will help you gauge its value. The other method appraisers will use to come to fair market value is the replacement method. If you are on land that is of high value, that coupled in with the cost to rebuild your home could result in a higher fair market value than the market value method.
As you cans see, the real estate market is going to play a role in what you end up getting as fair market value for your property. This is why it is important to watch the market in the event a claim of eminent domain is made against you. Be aware of the market, its current status, and how that will play into the ultimate result of what you get for compensation.