I do these frequently since about 80% of my work is for r/w acquisition, roads, sewers, power lines, walking trails, etc. Many times the current owner is convinced that his property value is adversely affected when, in reality, he's the only one convinced.
Some of the questions you need to address:
1. What is the typical setback for the area, street, and age/type of house?
2. How far is the setback being reduced? If most houses on the street are 50' from the road and the subject is 100' and they are all losing 25', the house 100' back is likely not going to be adversely affected.
3. Is the project affecting the well or septic, if applicable?
4. Will there be adequate parking when the project is complete?
5. Will the lot and/or house comply with zoning 'after' the project and what is the local authority's opinion on legal or grandfathered houses in this case? Will they grant an automatic variance if the house/lot is now non-compliant?
6. Are there setback damages only to the house or is the lot also being damaged?
7. Are municipal water and sewer and storm sewers included in the project and will their presence/availability offset any or all of damages?
Most r/w appraisers establish a r/w setback loss factor based on matched pairs, i.e., similar house sales in the area, one close to the road, one not so close, ideally they are about the same as the subject in the 'before and after'. Others use studies that are fairly in-depth and reasonable; I do it either way depending on the desires of the client.
You say that ..."Obviously, the lot value does not come close to how the property is negatively affected from the loss of the land..." How do you know and how have you proven this? If you go to court you will have to PROVE it. You sound like an advocate instead of a disinterested third party. Sometimes being closer to a wide, safer street more than offsets the perceived loss in value (at least in the eyes of a typical buyer). Many times the properties along a newly improved road increase in value because the road is now much safer, especially if sidewalks are part of the project. I've had owners crying and yelling about the fact that the project will '"destroy my property value" when in reality, the market often shows via area sales before and after the project that there were no damages at all and in fact the property values increase.
I would strongly advise you to contact your local International Right of Way Association and hire an appraiser as a mentor if you're determined to see this through. Better yet, tell the attorney to hire the r/w appraiser and see if you can go along and help for the experience.
If you end up on the stand, and its very likely you will in a case like this, you may end up wishing you'd passed this assignement on to someone else. This type of work requires specialized competence and not having it could be construed as a USPAP violation. Around here, the state and county frequently send faulty r/w appraisals to the appraisal board for review and dicipline when an inexperienced appraiser wanders into these strange waters, mucking up and delaying a road project.
Good luck!
