I’m having trouble believing you’re a lawyer after that. First year of law school, you’re taught how to analyze based on the “elements” of torts, crimes, etc., and the same goes for H&B Use. Nobody is “willing” to buy your property for a “federal gold reserve” precisely because it’s NOT the highest and best use. It’s not legally permissible unless you’re the gov’t (guaranteed…let alone your zoning does’t allow it…also guaranteed). It’s maybe physically possible, but I seriously doubt it. It’s only economically feasible if you’re the government, and therefore you don’t even bother trying to figure out if it’s maximally profitable. Your attempted “analysis” is fucking retarded because you simply declared an untruth as your entire premise. I’ve spent 20 years practicing real estate valuation law and litigating it. You sound like a 3rd grader.
There are marches country-wide tomorrow. Sign up for a march near you at
Bless your heart. See City of Harlingen v. Sharboneau, 48 S.W.3d 177 (Tex. 2001) (“Patterson’s appraisal oversimplifies the problem of finding market value in one crucial respect: it assumes that a willing buyer will value the land at the highest price that still allows a reasonable return on the investment. But a competitive market does not ordinarily guarantee that willing buyers will pay the highest price they can afford, for they will often have the option of purchasing comparable property for less money elsewhere.”).
Oh FFS. You’re still trying? And by citing to a case that you clearly don’t understand? First, that case/quote is talking about “highest price” not “highest and best use.” Second, that case is entirely about the admissibility of a valuation methodology as specifically applied by a particular appraiser.
Third, different states have different rules when it comes to the admissibility of certain valuation methodologies. Fourth, all states and the federal gov’t recognize that the fair market value of a property is arrived at by first determining its highest and best use (the case you cite does so early on by recognizing that the parties stipulated to the highest and best use of the subject property being for residential subdivision). Fifth, the appraisal was judged inadmissible because it was too speculative: because he both (a) didn’t have sufficient support for his “assumptions” about costs, etc. (we always have engineers, licensed site professions, wetlands experts, etc. to testify to costs) and (b) because he failed to provide evidence to back up his market assumptions…not because they were wrong, but because they were unsupported. You deliberately ignored the point the court makes after what you quoted: “nowhere in the many steps of his analysis did Patterson take into account any characteristics of the relevant marketplace that would affect what price a willing buyer would pay to a willing seller.” The court is not saying that highest and best use does not drive value. It’s saying that you have to put that highest and best use into its relevant context so you’re not feeding the jury a pie-in-the-sky analysis in a vacuum.
We try cases on the subdivision development approach, having them fully admitted and upheld, ALL THE DAMN TIME. The trick is providing an evidentiary basis for every single little thing in the discounted cash flow analysis. That includes factoring in risk, marketing time, appreciation rates, an appropriate discount rate, each and every cost and when they would be incurred (subdivision costs are frontloaded because of the roadway being built), providing backup for customary developer’s profits, establishing demand and competition (or lack thereof) for similar properties, reasonable probability evidence for obtaining all relevant permits (i.e., showing permits were granted to other similar projects), absorption rates for lots in similar subdivisions, availability (or lack thereof) of similarly situated subdividable land, wetlands issues, Title 5 issues, habitat issues, soil and groundwater issues, potential contamination issues, adjustments to comparable sales for size, proximity to the subject, time, amenities etc. etc. etc. The cases are a real pain in the ass and expensive for all the experts needed, but properly done you end up with a parade of experts each testifying about part of the spreadsheet and an appraiser who testifies to how it all fits together IN CONTEXT. Miss a thing or two and the whole thing can crumble and become inadmissible.
The appraiser and plaintiff’s lawyers in that TX case failed to do all that. The approach was discarded by the court because it failed to include market context and was therefore insufficiently grounded, leaving it too speculative to be probative of value. It was NOT discarded because it is improper to perform a highest and best use analysis and then value a property for that use. As is frequently stated, that value must take into account the likelihood of that use and its futurity…i.e., context. Moreover, it is worth noting that, as I mentioned earlier, different states approach the subdivision method different ways, and TX is one of the stricter ones…BUT the decision you cite both acknowledges that the approach can be admissible and that it is merely ruling on the particular facts and evidence in the case before it.
You’ll also note that the concurrence also focuses in on the issue of whether the approach is speculative, and reaches way back to 1897 to cite a case in which TX established a bright line rule that the approach is simply not admissible. It takes issue with the “winning” opinion for understanding that, properly done, the approach can reach beyond being mere “speculation.” Anyway, that old TX rule would be one of the most stringent in the country on the issue of subdivision approaches, which helps put into context the strict admissibility analysis that was applied. What it shows is that TX was traditionally on the side of courts that have found that if the highest and best use is as a subdivision, but the land is not yet subdivided, you’re supposed to go find comparable sales of large acreage ripe for subdivision, but which wasn’t subdivided yet…not engage in a discounted cash flow analysis of how the subdivision process would play out. It also shows that despite the old rules in TX, even TX is moving towards the admissibility of the discounted cash flow analysis. The reasoning there is analogous to another eminent domain rule, which is that your valuation methodology can’t involve attributing income to a building that’s not yet built on the property…it’s just too many steps removed and therefore speculation. some state courts treat the not-yet-subdivided lots the same way the other rule treats the not-yet-built building.
In any case, nothing about that decision changes the fact that to determine FMV, you first determine highest and best use and then value the property for that use. The case is all about what valuation methodology you then apply to it. But whatever…you’re obviously never going to get it. I’ve forgotten more about land valuation and eminent domain than you will ever ever know in your entire life.
I understand it quite well, thank you. Mr. Patterson’s “subdivision development method” appraisal was based entirely on the “highest and best use” of subdividing the property for single-family homes, then working backward to figure out a sales price for the property that would allow the developer to make a profit by subdividing and selling the lots. The majority opinion’s point is that the real world doesn’t look like that. Developers look to maximize their profits, so you can’t just extrapolate a hypothetical sales price that gives them something like a reasonable or customary profit margin.
Valuing a property based solely on its highest and best use doesn’t take into account the rest of the market for comparable, similarly usable property. It does not matter that the highest and best use of the plaintiff’s property was to be subdivided into single-family homes if the developer can just go across the highway and get a comparable piece of property at a better price. As long as there is price competition because the market has multiple potential sellers, nobody is going to be able to extract a premium sales price from buyers because the buyers can take their money elsewhere.
And note that the concurrence by Justice Baker (RIP) would have ruled out an appraisal number based on “highest and best use” entirely.
You clearly didn’t understand it, because you quoted to it as if you’d disproven what I said, and you hadn’t…not even remotely. Your little attempt at a “gotcha! tah dah!” moment, was ridiculous and you’re continuing to dig your hole.
Ummm, no. As I’ve said: (1) I represent large developers and land owners ALL THE FUCKING TIME and it is LITERALLY AND PRECISELY how they analyze a property’s value, whether selling it or considering buying it; and (2) the Court ruled that the approach was inadmissible IN THAT PARTICULAR CASE because the appraiser failed to provide sufficient evidence to take it out of the realm of speculation.
Yes, it does. In fact, that’s exactly what it does, because if done properly (which it wasn’t in that particular case), you investigate and study the relevant market, comparable properties and the sales thereof as part of the analysis that leads to the determination of the subject property’s highest and best use in the first place. You then present that evidence to show what the market says about the property you’re valuing for that use.
Good lord. That’s a matter of proof…dotting your Is and crossing your Ts. You provide evidence that they can’t do such a think by showing and relying upon comparable sales in the first place. You provide an analysis of the “stick” in the relevant market, how long it’s remaining on the market, how quickly it’s being absorbed, etc. What you don’t do is what you’re doing, which is pretending that you can just posit that such a property exists…or what the appraiser in that case did, which is assume, without providing evidence, that such a property doesn’t exist. THAT is why his approach was excluded…not because the court was finding that determining highest and best use and then valuing a property for it is wrong. You really need to read the Appraisal Institute’s textbook and the USPAP guidelines, because this is basic shit you’re messing up here.
But the barebones fact remains: YOU CANNOT EVEN CHOOSE YOUR COMPARABLE SALES UNTIL YOU HAVE DETERMINED HIGHEST AND BEST USE. Everything about valuing the property revolves around that determination. EVERYTHING. You don’t look at sales of raw acreage zoned industrial tin order to determine the value of raw acreage zoned for residential subdivision (unless you’ve determined already that market factors suggest the industrial use would be more appropriate AND you’ve been able to accumulate evidence that there is a reasonable probability of getting the required zoning relief).
And note that the reason for that is an 1897 TX decision that set a bright line test for excluding the subdivision approach outright based on declaring it TOO SPECULATIVE. The law of eminent domain has moved way past that and the main decision in that TX even shows that not only is TX moving past that kind of absolute analysis, but many other states they cite to have done so. Fact is, almost every state has done so and the reason for that is because, in the real world, developers and owners buying or selling raw land that has a highest and best use for residential subdivision perform precisely that analysis…a discounted cash flow analysis gaming out the subdivision’s income and expenses over time…in order to arrive at their purchase price. They do it EVERY. SINGLE. TIME.
What you’re not getting is that that was a ruling based specifically on the insufficiency of evidence in that case, not on some generalized principle that land isn’t valued for its highest and best use. It is, and the language in the case about the market considerations is really just splitting hairs, because that market analysis is really just part of the process of both arriving at the determination of highest and best use and performing the correct valuation approach based on that use. It’s inseparable, not some different and separate thing.
Oh, don’t get me wrong. Developers quite rightly analyze whether a particular acquisition would enable them to make them a profitable return on the resulting development. And they certainly aren’t going to do anything with it that isn’t awfully close to highest and best use because that maximizes their overall profits. But your clients are fools if they simply calculate an offer price that would enable them to profitably develop the property.
Me, a Real Estate Broker: There are several properties available that would suit the needs of your project, with listing prices from $105 to $180/ft.
You, a Very Silly Developer: My highest and best use analysis indicates that I can make a 25% return at $210, so that’s what I’ll give them. And not a penny less.
It’s pretty sad that you have to resort to nonsense. It goes like this:
You, a Real Estate Broker : There are several properties available that would suit the needs of your project, with listing prices from $105 to $180/ft.
Me, a Sophisticated Developer : “Thanks…I know that already and it’s been worked into my highest and best use analysis of what is economically feasible and maximally profitable, and is why I ultimately decided on the highest and best use I’m pursuing and which I have evaluated to determine my price.”
In this particular example, what you’re not fucking understanding is that the analysis would already have uncovered that evidence BECAUSE IT WAS NECESSARY TO OBTAIN THAT DATA BEFORE MAKING THE DETERMINATION OF TWO OF THE ELEMENTS OF HIGHEST AND BEST USE: ECONOMICALLY FEASIBLE AND MAXIMALLY PROFITABLE. Your example literally never happens and is not in any way, shape or form what I’ve been saying. No appraiser or developer would make the mistake you’re trying to claim is inherent in highest and best use analysis if they actually did the research to obtain market and other information necessary to make each of the 4 determinations: legally permissible, physically possible, economically feasible and maximally profitable. THAT is what the appraiser in the TX case failed to do. Nobody just throws numbers on a piece of paper and assume shit like “$210/s.f.”. They arrive at a value per s.f. based on market data FIRST. And if for some odd reason a broker or someone popped up and said hey, you missed this data point that indicates you can increase your profit margin because the land might be worth a little less than you thought, there isn’t a developer on the fucking planet who says “nah, I’ll just stick with my pro forma and overpay.” More likely, they call their appraiser and say “WTF am I paying you for if you’re missing data points?”
And then you go out and negotiate an actual sales price with the owners of one or more of the properties you’re targeting for development, who are stuck in a competitive real estate market where they can’t just demand you pay them based on the property’s HBU. The HBU number ordinarily cannot tell you, by itself, the hypothetical number that a willing seller would accept from a willing buyer to sell their property. It can inform that analysis, but it will not determine it.
You’re just fucking too dumb to get it. You’re like the dipshit kid who tries to outsmart the professor during the first couple weeks of law school because he’s hopped up on grandma telling him he’s the smartest kid in school all his life. The seller does a HBU analysis and is well informed and aware of what his property is worth for its highest and best use. EVERY. SINGLE. TIME. He will push for a higher value by tweaking here and there and the buyer will push for a lower value by tweaking here and there, but BOTH PARTIES will have gone out and done the research to determine both what the property’s highest and best use is and what its value FOR THAT USE is. This idiotic idea that there’s some magical other way to value property or some mystical market information that HBU does not consider, evaluate and use in order to make the determination of use and therefore value, is nothing but your imagination running wild. You seem to think that highest and best use involves some kind of analysis of “what is the most magical pie in the sky number I can come up with in a vacuum.” It is not. Not even remotely. The analysis is driven entirely by market data and expert opinions on a variety of subjects, from wetlands to engineering costs to interpretation of the relevant land use regulations, which is why the failure to present sufficient market data to support the approach in that TX case caused the court to reject it.
So please just stop. You are talking to an expert in the field and you are not one and it shows. Anyone who knows anything whatsoever about real estate valuation would laugh heartily in your fucking face.
THE “HBU NUMBER” IS THE FMV. Period. End of story. THAT IS BASIC APPRAISAL PRACTICE AND STANDARDS. When it comes to presenting that analysis IN COURT, you must back up every step of it by providing sufficient data, including market data, both to support the determination of the HBU and to support the choice of valuation methodology and the execution of that methodology. Relying on a case addressing the INSUFFICIENCY OF EVIDENCE to support a particular methodology, which happens to be the single most complicated and controversial methodology in terms of admissibility in the first place…with historically wide variance between the states as to how it is treated (albeit with movement towards consensus over time), is not evidence that HBU does not determine value. It does. BY DEFINITION. That is the entire purpose of its existence.
Bless your heart even more. Bye.
Prescient.
From Rudy’s interview with Cuomo, it appears that is exactly what happened, and Guiliani himself gave it up.
They are going to run with the theory that the President can make all sorts of deals privately with foreign leaders, and not only is it not illegal, its illegal to reveal that he is doing so, since its classified communications.
But what this is, is the President engaged in self dealing…using American Foreign Policy (withholding aid already approved by Congress), to blackmail a foreign country into digging up/creating dirt for his personal gain.
When Rachel gave a time line of possible trump phone conversations it struck me that this was the time that Rudy was out on his political smut gathering tour to use in the next election. I suspected it was the Ukraine thing but didn’t want to make a fool of myself bloviating about something I knew nothing about. It seemed logical that Rudy was in on subverting Democracy along with trump. Rat fuckers got to rat fuck.
I kind of still feel that way about this story. I have opinions, but there still seems to be a lot of stuff hidden that we don’t see or know yet. So I want to refrain from too much speculation, as this smells like something that can make a radical left turn at any moment.
Rus was the name given to the Vikings who raped, pillaged, and traded their way thru central Europe.
Supposedly, there were multiple people who heard this conversation. The trick will be to get more than the whistleblower on record giving the same account of what happened. That’s going to be very difficult because his sycophants will lean his way regardless of truth or reality.
From the Wiki:
By around the eleventh century, the word Rus’ was increasingly associated with the principality of Kiev, and the term Varangian was becoming more common as a term for Scandinavians traveling the river-routes.
Little, however, is certain about the Rus’. This is to a significant extent because, although Rus’ people were active over a long period and vast distances, textual evidence for their activities is very sparse and almost never produced by contemporary Rus’ people themselves.
*Swedes. The Rus were Swedes that moved east to NE Europe, then traveled down the Volga. Most likely, Rus was either the name of their tribe, or a close derivative.
There were no people in the middle ages called “Vikings.” What we call Vikings were simply pirates. In fact, Viking and Vikingr were the old Norse words for raiding and pirating. They weren’t a tribe, or a people. The makeup of a Viking crew was just as likely to contain English, Franks, or Danes.
I was under the impression that ‘vik’ was “bay”, hence the people who lived down by it and made their living on the water?
Looked it up, and looks like we’re both right.