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

Listed author(s):
  • 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)

Registered author(s):

    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.

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    Article provided by American Real Estate Society in its journal journal of Real Estate Research.

    Volume (Year): 26 (2004)
    Issue (Month): 3 ()
    Pages: 317-328

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    Handle: RePEc:jre:issued:v:26:n:3:2004:p:317-328
    Contact details of provider: Postal:
    American Real Estate Society Clemson University School of Business & Behavioral Science Department of Finance 401 Sirrine Hall Clemson, SC 29634-1323

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    Order Information: Postal: Diane Quarles American Real Estate Society Manager of Member Services Clemson University Box 341323 Clemson, SC 29634-1323
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