Wednesday, March 11, 2009

Eminent Domain and Payment of Court-Appointed Appraisers

Here's a recent example of government waste in action.

A normal real estate appraisal costs about $500. That's for a complete written report. Generally it takes the appraiser about 3 hours to complete, which time includes visiting the property. The report is generally an impressive document, detaling the comparable sales used, features of the subject property and the analysis use to arrive at the value.

In eminent domain, when a complaint is filed the court will appointed three individuals to appraise the taking and any impact on the rest of the property. Only two of the three need to be licensed appraisers. The third merely has to be a property owner in that county. The three have to appear at the courthouse, get sworn in and receive their (standard) instructions. They then visit the property and pull some comparable sales. They then fill in a couple blanks on a standard form and turn it in to the court. That is the initial award of the appraisers that either side can object to.

That happened in an eminent domain case I am handling. However, the court's order with respect to the award, included a provision regarding payment to the court-ordered appraisers. Each appraiser had submitted bills of $125 an hour (including the person who wasn't a licensed appraiser) for 7 to 9 hours of work. The total bill the State of Indiana, i.e. taxpayers, was ordered to pay? $2,937.50. Again, that was not for a $500 residential appraisal that is a several page document. The $2,937.50 was for three people to view the property and fill in blanks on a form. I asked a real estate professional familiar with the cost of real estate appraisals whether the cost was out of line. She could not believe the $2,937.50 bill. Neither could I.

No comments: