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Chronicles of an Appraiser.

It's Only an Opinion: An Appraiser in Court

by Henry J. Wise

Published by Old Stone Press, Louisville, KY, 2019,

216 pages; $24.95 softcover, $7.99 Kindle

The chronicles of Henry "Hank" J. Wise's thirty-five-year career as an appraiser and witness are dispensed with humor and humility in It's Only an Opinion: An Appraiser in Court. The author's experiences are as varied as his education, which includes an academic background in political science and economics and teaching for the Appraisal Institute, the University of North Carolina, and West Georgia College. Wise's participation in diverse appraisal litigation assignments provide the background for lessons learned throughout the author's professional life, which he candidly shares with the reader.

One of the early lessons learned by the author is from a seemingly innocuous factual error he made when a lender client furnished an incomplete photocopy of a survey with a missing dimension he understandably overlooked, which resulted in a value error of less than one-half percent that was discovered during court testimony. The error resulted in the lender client going through the foreclosure process twice, and the author's errors and omissions insurance carrier was obligated to pay back the appraisal fee and about $25,000 in other costs to the lender client as a settlement. Yes, it was the same lender client that furnished the incomplete copy of the survey. Wise uses this event to advise that appraisers seldom get into trouble for an error in judgment but can get into serious trouble for a factual error. The lesson conveyed is to check all the facts personally and trust no one to do your job.

Chapter 2 is devoted to the author's journey in becoming an appraiser, earning the Appraisal Institute's MAI designation in addition to two master's degrees, and the certified business appraiser (CBA) certification. Information is provided detailing a brief history of the Appraisal Institute and the Society of Real Estate Appraisers as well as their related designations. The expert witness function is explained in Chapter 3. Chapter 4, "Appraisal Is a Stinking Business," follows, with a discussion about a condemnation court case involving a rendering plant used for converting dead horses, cows, spoiled meat, and restaurant grease into marketable commodities used in various products. The courts in Georgia allow testimony and awards for loss of business value in condemnation cases, and the ruling on the rendering plant case clarified Georgia law when a condemnation results in the closing of a business. Additional unique, instructive assignments are discussed in Chapter 5.

In Chapter 6, "Litigation Support," the author opines that the expert witness has about two minutes of the jurors' attention after they have listened to a pronouncement of the appraiser's qualifications. He suggests the jurors are not going to listen to the appraiser's arguments after the initial two minutes but will decide which expert witness they like better. In order for the expert witness to have a jury's trust, the jury must like the witness. Further, Wise maintains the jury members must like the witness before they will accept the opinions offered.

Wise stresses the importance of his professional designations, advanced academic degrees, publishing, and election to office in professional associations as avenues for gaining credibility and distinguishing himself as an expert. Wise notes that quite often, knowledgeable opposing legal counsel will attempt to dispense with the expert voir dire (establishment of the expert's qualifications) if the qualifications of the opponent's appraiser are far superior to those of their witness. The opposing legal counsel will simply accept the appraiser as a qualified expert witness before the voir dire in order to prevent the jury from hearing the superior qualifications of the other side's expert witness.

The definition of an appraisal is discussed in Chapter 7 along with different report types and what should be included in the report. Form reports are mentioned as the type usually used by the Georgia Department of Transportation and other state departments of transportation. While much of the work performed for litigation involved appraisals prepared for departments of transportation and other condemning authorities, the author's work is not limited to this segment of the appraisal business. Chapter 8, "Up to Our Ass in Alligators," discusses one of the most significant studies performed by the author and his firm--appraisal of the Everglades. This assignment involved the study of approximately 2,500 sales in the East Everglades and Big Cypress swamp to be used by the Environment and National Resources Division (ENRD) of the US Department of Justice in the condemnation of more than 2,000 separate parcels in the Everglades. A key point of this chapter is "what to do when there is too much data." In this instance, the analysis incorporated a stepwise multilinear regression model to determine the impact on value for ten to eleven variables, such as location on a paved road, proximity to a bridge to gain access, and date of sale. (Interested readers can access the study at

In Chapter 9, marketability and liquidity discounting are discussed, especially in relation to family limited partnerships, limited liability companies, limited liability partnerships, and minority interests. The author's skills in business valuation expanded his client base. Various case studies involving the appraisal of mines, minerals, caves, and wells will be of interest to most real estate appraisers. Some appraisers' appetites for business valuation entry may be whetted by the author's brief discussion of business appraisal techniques and opportunities.

Wise's experiences with the appraisal of railroad right of ways, pipelines, fiber optics, and community antenna television corridors are presented. Eminent domain, inverse condemnation, and the cost of litigating are explained in layman's terms with examples that provide recommended reading for parties embroiled in such affairs. Chapter 13 offers advice to property owners who may find themselves dealing with condemnation authorities. An interesting and frank discussion on percentages used for temporary and permanent easement values is presented, and a somewhat unique discount adjustment is suggested when temporary easements are based on land rent for the time covered by the easement. The crux of most disputed condemnation cases involves the difference in highest and best use opinions of the property after the taking as perceived by the opposing parties' appraisers. Usually, not much difference is found between the dueling appraisal witnesses regarding the value of the acquisition; however, the larger condemnation awards are attributable to the damages (loss in value after the taking), and several examples demonstrate the point.

In Chapter 15, on senior living facilities, the author examines units of comparison, differences in level of services offered by segments of the market, property tax considerations, and extracting business value of the going concern. Appraisers are cautioned to exclude values for intangibles, such as membership payments, personal property, a trained and organized workforce, and business value that should not be considered in appraising senior living facilities for real property tax purposes. Wise suggests clues that indicate a property has intangibles, including the number of persons employed to operate the property, the degree of a trained workforce required, the cost of consumables, and the level of services offered.

The author also examines the types of benefits and damages that affect valuations in condemnation. Special benefits and general benefits are explained through examples the author has used in teaching, and these give the reader a clear understanding of the terminology used in condemnation appraising. Consequential damages and proximity damages are discussed in Chapter 16, along with business value loss available in condemnation cases within some jurisdictions. Here, Wise uses entertaining and interesting scenarios to illustrate concepts. The importance of highest and best use determination for condemnation appraising is demonstrated through an example where a shopping center's potential use dramatically changed after a highway project impacted the access to the property. The case was settled when the property owner-developer produced two competing shopping-center developers as witnesses to testify regarding the impact on value caused by loss of adequate access to the condemned property and how this resulted in a change in highest and best use. Normally, changes in access, such as installation of highway medians, are not compensable as they are considered police actions for safety. However, when the access after taking results in a change in highest and best use, compensation may be available to the property owner as exhibited in the shopping center case.

Another example looks at the author's involvement with a court case dealing with the Oceana Naval Air Station in Virginia Beach, Virginia. This assignment is used to demonstrate how he estimated loss in value to a number of properties in close proximity to increased Navy flight operations and the accompanying noise caused by low-flying fighter jets. Demonstration of the use of Day-Night Level Decibel or DNL measurement techniques by the author in the Oceana Naval Air Station case should provide appraisers with a model for estimating property value loss in other scenarios where noise impacts the market acceptance or dissatisfaction with varying noise levels. Almost 3,700 sales and resales of the same houses, before and after the substantially increased flight operations, were analyzed using SAS software.

For appraisal assignments involving hotels, nursing homes, hospitals, and other property types that have an element of intangible value, about half of the states permit the property owner to claim business damages in condemnation cases. Sometimes a property owner's financial records do not reflect receipts that should be estimated, and Wise encountered such a case in appraising an adult entertainment store. The author's humorous experience during cross-examination in that case provides an interesting conclusion to the subject of business value loss in Chapter 18.

A broad appraiser audience will benefit from the techniques, appraisal models, and life encounters offered by Henry J. Wise in It's Only An Opinion: An Appraiser in Court. Wise examines a variety of appraisal subjects using his personal experiences, and the reader will certainly relate to the perspectives he presents. New appraisers will find it an excellent supplement to their textbooks, and experienced appraisers will receive a dose of motivation and stimulation to review and delve deeper into the use of additional appraisal tools and methods.

Warren Klutz, MAI, SRA, AI-GRS, MS, MBA, CCIM, is the principal in the firm Warren Klutz & Co., based in Bristol, Tennessee.

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Title Annotation:It's Only an Opinion: An Appraiser in Court
Author:Klutz, Warren
Publication:Appraisal Journal
Article Type:Book review
Date:Jan 1, 2020
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