Factors that affect compensation
In general, compensation is supposed to be based on fair market value. However, both the government and the landowner may hire expert witnesses who calculate different values. Furthermore, fair market value still cannot make up for issues such as the stress of moving or the emotional toll of leaving a beloved home and community. Assessing this value is based on such factors as the property’s size, accessibility, development, use, zoning and any unique characteristics.
Approaches to compensation
Property is traditionally assessed using one of three methods: market, income or cost. The market approach is common with residential properties and involves comparing it to similar properties that have sold recently to assess its value. The worth of properties that produce income may be determined using the income approach. This takes several elements into account, including the net operating income and the rental income. Finally, the cost approach is generally used for property that contains what is known as a “specialty” structure, or a building that serves a very specific purpose.
Dealing with a government’s claim to your land can be stressful if it is your residence and potentially financially damaging if it is an income-earning property. If you are facing government action involving eminent domain, you may want to contact an attorney. A lawyer may assist with valuation and work with you to resolve your eminent domain case whether that is done through an out-of-court settlement or litigation.