Appraisers' Free Forum

Interesting. I've never actually done work under the Act, and therefore, have not acquainted myself with it. Maybe something I should look up.

Steve Owen wrote:Interesting. I've never actually done work under the Act, and therefore, have not acquainted myself with it. Maybe something I should look up.

I was wondering and thinking that myself - LOL.

I agree with the yes/no answers, but some of the reasoning just loses me, like the third question on ignoring the effect on value of the project. This would give the curious a taste of some of the issues involved.

1. Let's say there is a blighted area where land sells for $1/sf per square foot. At some point, the govenment announces a project (like a stadium or something). Land near the proposed take starts to sell around $5/sf in anticipation of the benefits of being near the stadium. Then, after due bureaucratic process, the government hires an appraiser.

2. As I understand the rulings of the federal courts, it would not be "just" to compensate the owners of blighted land $4/sf in value created by the condemantion. That is, they owned blighted land worth $1/sf, and that is what was taken, thus that is what they should be paid. The appraiser should use the comps that set $1/sf as the value of blighted land, either by using sales from before the announcement or using blighted comps from outside the scope of the project's effect, or both. The bottom line is the $1/sf represents "credible results" for the before-the-taking value, and $5/sf doesn't.

3. Uspap says you have to make sure the changes noted in point #1 (land going from $1/sf to $5/sf) "are reflected in the actions of the market." Yeah, so why is that a conflict? It's already been done.

4. The indicated just compensation for a blighted parcel that is taken is thus: value before of $1/sf, less value after of $0, equals just compensation of $1/sf.

The ASB seems to be saying there is no conflict between 1-4f and the rule in point #2, because 1-4f is conditional. The SR says what to do when you are making the analysis. The ASB is saying that because of the court's rule, the analysis is not needed at all, so the requirement for how it must be done is irrelevant. There might be some set of circumstances in which that reasoning would be sound, but this set of facts is not such a circumstance.

IMO, it is impossible to avoid the analysis required by SR 1-4f and have credible results other than by luck. As my example shows, the appraiser is not avoiding making the analysis. The appraiser is making the SR 1-4f analysis. There is a difference between 1) not making a change analysis that finds land went from $1/sf to $5/sf, and 2) making a change analysis but using $1/sf and not $5/sf as the indicator of subject's before-the-taking value. It seems to me that complying with SR 1-4f is essential to complying with the federal rules on taking, because the appraiser who doesn't make the analysis is the one likely to misreport the before-the-taking value for blighted land at $5/sf. Making the analysis referred to in SR 1-4f is necessary to produce credible results.

As you can see, this kind of work entails a lot of arguing. Lots of "stips" - real and imagined.

I'm not sure I'm following all of that... perhaps my ignorance of the act is getting in the way. Are you basically saying that the Fed rule creates jurisdictional exception, but you still have to do the analysis to be credible?

Steve Owen wrote:I'm not sure I'm following all of that... perhaps my ignorance of the act is getting in the way. Are you basically saying that the Fed rule creates jurisdictional exception,

The ASB said no exception and I said I agreed with the ASB answer - but not their reasoning. Their reasoning is that SR 1-4f is not relevant to the assignment, but SR 1-4f is very relvant.

but you still have to do the analysis to be credible?

That's why I see no conflict. It seems obvious to me that one has to the SR requires - and would have to do it, even if that specific SR didn't exist.

In the specific case study I created, if one does not analyze the effect of the proposed public improvement on subject's value, one would not be able to determine whether the taken property is blighted land worth $1/sf or spec land worth $5/sf. Only one of these is credible for this intended use. Taking that out to a broader "principle" - one cannot exclude the "effect" of a proposed change on one's opinion of subject's value until AFTER one determines if the proposed change had an effect. That principle is, IMHO, a blatant example of "common sense."

I am quite concerned that my post, even though written late at night, is not understandable. Those idea are a regular part of the conversations between the government's negotiator and those whose property is taken. If the case goes to court, this type of conversation is the sum and substance of proceeding.

I took a Yellow Book class in 1993, for the 1992 Yellow Book. The class I took highlighted passages of the book in an ad hoc sequence - do this, don't do that. Yuk.

Don't you find that once it is made into a case study with actual numbers, it makes itself clear?

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I'll bet, since it was an AI course, it talked about the book like it was gospel. In terms of standards theory, the book is moot and so is CFR 49. In the example I gave, the owner would get paid for blighted land, because that is how the courts have interpreted "just compensation." To the extent that the Yellow Book or CFR 49 happens to paraphrase the court correctly - goody for them. Other than that, the condemnation agencies are just another greedy client with a pecuniary interest in the outcome of the appraisal, even if they aren't supposed to be.

But what form does it go on?

(like the market study his firm did in the Everglades.)

I heard some war stories. I am in the same district. That aquisition has been going on for over ten years. There have been literally thousands of appraisals.

Takes from three to ten days at his shop just to complete the RFP on some jobs

Someone ought to write a book on doing RFP's. Or just on working as a contractor - and more than just "fast and cheap, you can't have both at the same time." Like, how often should you bids be rejected before you know you are not underbidding and leaving money on the table.

When I was writing that post with the blighted land, I was thinking about the "other" forum and all the posts complaining about residential mortgage clients not caring about "quality." Man, there is a whole world of appraising out there.

I am glad you had a good experience and hope you get into the game.

Pina Colada wrote:I am quite concerned that my post, even though written late at night, is not understandable. Those idea are a regular part of the conversations between the government's negotiator and those whose property is taken. If the case goes to court, this type of conversation is the sum and substance of proceeding.

I suspect that it has more to do with my lack of understanding of the regs on this type of appraisal work than it does with the understandability of your post.