FYI
I just read an interesting article in the June edition of WORTH Magazine about trophy trees. It is now a trend for the new home builder to put in one or more large mature trees to give the hnew home a lived in look. Not just for old peoples who don't have time to wait, but now younguns are doin it. These trees run from 10 to 30 thou each, but according to a realtor quoted in the article, trophy trees can easily add 20% to a home's value.
If my math is correct, a $20,000.00 tree on a million dollar property would all of the sudden be worth $200,000.00.
How about a reasonableness test on that one, Scott!!!
verytreelylew

Reply to post by lewbloch, on May 10, 1999 at 18:12:30:

Not suprising Lew. There was a NY Times article a few years back about trees in the Hamptons (That's Long Island, NY folks. Think the seaside mansion Michael Douglas's character lived in in Wall Street) going for $40,000 to $50,000.

As to reasonableness maybe it's a few trees that add 20%, but there's still quite a spread between Cost to Replace and Contribution to Market Value. So it goes back to defintion of the appraisal problem: A) definition of value and b) value to whom.

If the definition of value is contribution to FMV then maybe it is (20% of market/# of trees). At least that's the gross value to be realized by the developer. And one would guess to the uneducated consumer. But if definition of value is cost to replace and you use a replacement cost approach then maybe it's $20-40K. At least that's what the developer will pay and deduct it from the gross increase in market value. Or that's what the educated consumer would pay as a premium compared to a property without trees.

And if the garbage truck runs off the road and destroys the tree the day before the closing and the deal loses $100,000 (1/2 the premium the buyer was willing to pay) then maybe the court awards the developer the loss in market value plus the replacement cost of the tree.

They are all reasonable in the context of the facts and the definition of the appraisal problem.

Reply to post by Scott Cullen, on May 10, 1999 at 18:12:30:

I agree with all of the above, Scott, and in MD., tree(s) may be worth more than the property value.

However, I would find it hard to justify a trophy tree being planted for 20K an in just a few weeks (if damaged) become worth 200K.

verylew

Reply to post by lewbloch, on May 10, 1999 at 19:31:14:

It would be an extreme example Lew. I think this is the sort of case (or maybe all cases should be this way) where the experts present facts and the parties/judge/jury reach the final opinion.

Say the new mansion is built (builder A) and on the market for $1.8million. It's been a busy season for builders and there are 20 of these available (builders B, C, D.....). So this one's not moving. Maybe the price should be reduced? Builder a gets togethewr with his r.e. broker, appraiser and landscape architect. "The problem isn't price, $1.8 is a bargain given land prices and per sq.ft. building costs. The problem is there are two many alternatives and nothing to set you apart.

So, plant 5 trees at $20K each: 2 sugar maples, 2 pin oaks and in the prime view a huge, weeping copper beech. (The beech is one of a kind, the nurseryman's been root pruning for 4 years now in prep for sale, too much longer and that new low overpass will be built on the road to the nursery and it won't be transportable). A clever brokerage maneuver: take it off the market, take down the for sale sign, plant the trees, put it back on the market raise the price $200k to $2million. Voila, a bidding war the first day and it goes to contract for $2million. Day before closing the garbage truck runs off the road, over the lawn and destroys the beech. At closing a $100k deduction for the lost beech.

So it cost (historical) $20k to put the beech in. There are no replacements available so say 2:1 is suggested, that makes it $40K. But the builder is out of the picture he doesn't want two beech trees sitting in the parking lot at his shop. Besides, he's out $100K in profit that was CONTRACTED for, it's not hypothetical.

It's all in evidence. You testified, so did the nurseryman, the LA, the broker, the closing lawyer, the broker the r.e. appraiser. The facts justify the judgment.

I'd find it hard to say the lost beech was not worth $100K to both the buyer and the builder.

Definition of value, value to whom, value at a specific point in time.

Reply to post by Scott, on May 11, 1999 at 18:26:08:

you missed your calling, Scott, you should have been a story writer (I guess I mean author) Of course there are many possible scenarios, and you astutely pointed out one of them. Also, as you know, the guy or gal that wins in court is the one with the best presentation. "If the glove don't fit, you must aquit."
Keep it up, Scott.
verytreelylew

Reply to post by lewbloch, on May 13, 1999 at 06:57:12:

At least a gazillion possible scenarios Lew. It all comes down to a) facts, and our ability to discover and understand them and b) our ability to communicate and help client / judge / jury / whomever understand those facts. Hopefully, discussions like these and better professional materials - like your upcoming 9th edition - will help with both.

Reply to post by lewbloch, on May 10, 1999 at 18:12:30:

Somewhere in this thread I mentioned an article in the last 2 years or so in the NY Times about trophy trees in the Hamptons (Long Island, NY). This weeks times had an article about the same market and new owners turning dead flat farm fields into rolling landscapes with hills and dales and ponds and waterfalls and bridges and terraced formal gardens. And the closing is May 1, you will have it ready for my 4th of July party (yes this year). I don't want to hear about problems i want to hear about solutions. Money is no object, just do it.

Oh and get some trees too. A lot of trees. Big trees. Better if they are rare or unusual. Or even if they're common if they are real expensive to get here, close down the expressway, drop the power lines for the whole town, I really want to impress people about what a BFD I am.

Value to whom. Value when.