This article originally appeared in the International Right of Way Association Sunshine Chapter No. 26 Florida in August 2023 and was written by Peter D. Waldman.
When appraising the land to be acquired pursuant to the potential acquisition of property for right-of-way projects it is important to utilize the correct unit of value. If the correct unit of value is not utilized it can result in the property being undervalued, which could lead to a too low initial offer to the property owner. A too low initial offer can result in higher fees and costs for the condemning authority seeking to acquire property for a particular project.
I have seen too often where the a per square foot value of land was used in an appraisal when that was not the correct way to value the land for a particular property. For instance, a property that has a highest and best use for residential development should not be valued in that way, as the most likely purchaser of that type of property is a developer who is going to value the property based on how many units they can develop. Another example, is the valuation of a property improved with a retail gasoline facility, where the value is mostly in the land and not the improvements. That type of property should not be the value based on improvements including the land, but the value of the land including the improvements.
It is important that the correct unit of value is utilized in order to ensure that an appraisal contains the correct valuation of the property. To fail to do this can have serious ramifications for the acquisition of parcels for a right-of-way project. Incorrectly appraising property for a right-of-way project can result in budgetary issues for the acquisition program, which can result in shortfalls for acquiring all of the parcels needed for a particular project.
To read the original blog post in the International Right of Way Association Sunshine Chapter No. 26 Florida, click here.
