Fair Market Value in Texas Eminent Domain Cases

What fair market value means

Market value is the price the property would bring when offered for sale by one who desires to sell but is not obliged to sell, and bought by one who desires to buy but is under no necessity of buying.

Two phrases carry the weight. Neither party is under compulsion, so the pressure you are actually under does not reduce the price. And the property is offered for sale, so the measure is what the market would pay rather than what the entity has budgeted.

Highest and best use

Property is valued for the highest and best use it could lawfully be put to, not only the use it has today. A use qualifies where it is physically possible, legally permissible, financially feasible and maximally productive. A reasonable probability of a change in use can be considered.

Factors that affect value

• Location. County, corridor, proximity to markets and services.
• Size and shape. Acreage, frontage, depth and configuration.
• Property use. Current use and the uses the land could support.
• Improvements. Structures, fences, pens, wells, roads and water systems.
• Comparable sales. Which sales were selected, and how each was adjusted.
• Access and utilities. Road frontage, entry points and available services.

How appraisers differ

Two competent appraisers rarely reach the same figure. The gap usually comes from a short list: the comparable sales chosen, the adjustments applied to them, the highest and best use identified, and whether the remainder was analysed at all. Reading both reports side by side normally locates the difference quickly.

Property type differences

On a home, comparable sales dominate. On a commercial site, income and access matter. On a ranch or farm, the working configuration of the remainder often carries more value than the acres taken. The definition does not change, but which evidence proves it does.