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Residential Properties Taken Under Eminent Domain: Do Government Appraisers Track Market Values?

Author

Listed:
  • Terrence M. Clauretie

    () (University of Nevada, 4505 Maryland Pkwy, as Vegas, Nevada 89154)

  • William Kuhn

    (University of Nevada, Las Vegas)

  • R. Keith Schwer

    (University of Nevada, Las Vegas)

Abstract

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 (in-house or independent) to calculate an offer on the property. If the goal of the government is to avoid costly (use of administrative resources) litigation it may have an incentive to over-appraise the residential properties. Such over-valuation would transfer the cost to taxpayers. We compare the appraised value of sixty properties taken through eminent domain in Clark County, Nevada to comparable properties sold in free market transactions. We find evidence of over-appraisal of the properties taken by eminent domain. By valuing individual property characteristics differently from the market, the government over-appraised properties by approximately seventeen percent. We also provide evidence that the government may use simple rules for appraising the properties, whereas the market employs more complex rules.

Suggested Citation

  • Terrence M. Clauretie & William Kuhn & R. Keith Schwer, 2004. "Residential Properties Taken Under Eminent Domain: Do Government Appraisers Track Market Values?," Journal of Real Estate Research, American Real Estate Society, vol. 26(3), pages 317-328.
  • Handle: RePEc:jre:issued:v:26:n:3:2004:p:317-328
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    Cited by:

    1. Yun-chien Chang, 2010. "An Empirical Study of Compensation Paid in Eminent Domain Settlements: New York City, 1990-2002," The Journal of Legal Studies, University of Chicago Press, vol. 39(1), pages 201-244, January.

    More about this item

    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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