In an imminent domain case, the valuation has to be has to be presented by an licensed appraiser who has to
generally use one of the traditional approaches to valuation, which are the comparable sales approach, i.e., what do
other properties like mine sell for on the open market? and they usually determine what’s a per square foot price and use that per square foot price to
apply it to uh the the subject property, the property being taken. Alternatively, properties might sell on the income
approach to value, which is the value the property makes because of the income that’s generated from the property. And
you look at other properties and what their income approach resulted in in terms of what they sold for. And there
are things like capitalization rates and things like that that that appraisers use to value that. The final approach
that’s not used very often is called the cost approach. The cost approach is what it would cost to buy the land and then
rebuild the improvements that are on it and then depreciate that. The reason the cost approach isn’t used very often is
because it’s fairly subjective other than the land value. You can imagine somebody might decide that the
improvements are would cost $1,000 a square foot to build and somebody else might say they’re $200 a square foot to
build and at the same time they might say they’re depreciated by 60% or they might say they’re depreciated by 20%.
All those factors make the cost approach less reliable and it’s very seldom used in the open market which is really driving what value should be.