12 Pages Posted: 29 Dec 2006
Local governments often use powers of eminent domain to take residential properties for public use. In such cases, the local government will use their appraisers to calculate an offer on the property. If the government's goal is to avoid costly (use of administrative resources) litigation it may have an incentive to over-appraise the properties. Such over-valuation would transfer the cost to taxpayers. This study compares the appraised value of sixty properties taken through eminent domain in Clark County, Nevada to comparable properties sold in free market
transactions. The findings indicate a 17% over-appraisal of the properties taken by eminent domain. The findings also indicate that a government may use simple rules for appraising the properties, whereas the market employs more complex rules.
Keywords: eminent domain, over valuation, over appraisal, residential
JEL Classification: L85, R11, R12, R15, R21, R31, R38, R51, R58
Suggested Citation: Suggested Citation
Clauretie, Terrence M. and Kuhn, William and Schwer, R. Keith, Residential Properties Taken Under Eminent Domain: Do Government Appraisers Track Market Values?. Journal of Real Estate Research Vol. 26, No. 3, 2004. Available at SSRN: https://ssrn.com/abstract=954020
By David Dana