When a property is condemned, or taken, through the eminent domain process, there is a requirement that the government must pay the property owner just compensation for their property. Just compensation is determined but what is the fair market value for the property. It is important for property owners impacted by eminent domain to know what that is so that they can adequately protect their rights and interests.
Factors that may be considered when determining the fair market value of the property can include the size of the property; the accessibility of the property; any zoning regulations that apply to the property; any unique characteristics of the property; the level of development of the property; and any current or potential uses for the property.
In addition, there are several different approaches to property valuation that may be applied to determining the fair market value of the property. The market approach to valuation of the property will take into account any recent comparable property sales. Alternately, the income approach is an appropriate measure for income-producing properties. A third option property owners should be familiar with, the cost approach, may be utilized if the other two valuation approaches are not appropriate and the property includes unique features.
In many instances, the government and the property owner will disagree on the fair market value of the property. When that happens, property owners need to know how to protect their interests which can include, among other things, by engaging an expert to help determine the fair market value of their property to ensure they receive fair market value for their property.