This section is from the book "Practical Real Estate Methods For Broker, Operator & Owner", by Thirty Experts. Also available from Amazon: Practical Real Estate Methods for Broker, Operator, Owner.
John Means Thompson
Danger in Speculative Values - Objection to Rules - Interior Lots - Consequential Damage - Water-front Appraisals - Valuing Leaseholds - Tax, Condemnation, and Court Proceedings - Capitalization as a Factor of Value is but appraising in a higher degree, and is the nearest approach to a science that our profession affords. Let me caution witnesses that in cases in which they are to give expert testimony they should thoroughly understand the case and study all its surroundings. In cross-examination they will, in almost every instance, be confronted by a shrewd lawyer watching for an opening by which he can expose them to searching cross-examination and break down their guard. If their case is carefully prepared and they have their subject well in hand and will keep control of themselves, they will find they are more than a match for the most astute cross-examiner. His knowledge must be, at best, but theoretical, while their knowledge, which is gained from actual experience, gives strength to their case and should inspire such confidence in themselves as to disarm anything that the opposing attorney may advance. They should not be hasty in their answers, but sharp, decisive and to the point. They should be careful not to advance an opinion in such a way that it will give offense; should exercise care and diplomacy. Oftentimes, if it is done in this way, opponents will not object to testimony even if statements may not be within the strict rules of evidence. Above all things, they should keep their tempers. I know of one attorney who tries to anger a witness in the hope of exciting him, and anger him he often does by his rudeness. I have found the only thing to do is to keep my temper outwardly at least, and with studied politeness ignore the insinuations and sarcasms.
The next most important thing to remember is that a careful record should be kept of testimony in all cases. One never knows when he will be confronted by former statements and will find it most embarrassing if it be not in accord with present testimony or if any discrepancy cannot be reconciled. The giving of hasty opinion is to be avoided; it is far better to say the question asked has not been considered and that it is impossible to answer it until further examination into the matter.
Copious notes of an examination and a full set of all figures are an advantage. Do not rely upon memory, do not be disconcerted by the attorney who asks you if you cannot testify without your notes, for it is an impossibility to do so, and the Court will readily recognize the fact. Above all, if asked to make calculations on the witness stand, do not become confused, but make calculations deliberately. It will be far better to spend the time in this way than to make an error difficult of correction.
The first step in preparing any case is to make a thorough examination of the property concerning which you are to testify. I would suggest that you take with you a stenographer, for if you dictate notes they will be of much value to you in the future, especially if the proceedings are of long duration and the buildings are likely to be destroyed prior to your giving testimony.
Next study carefully the neighborhood and surroundings, the present conditions and any changes that are likely to take place in the immediate future that will have their effect on values. I try as a rule to be able to describe (in a general way) every block contiguous to the property to be taken. When I testified in the Bellevue Hospital proceedings I was able to detail the character of every block from 24th to 32nd Streets on First Avenue and describe the character of the buildings. In addition I could tell the use of each pier and bulkhead on the East River from 8th to 32nd Streets. This covered a very wide area, but I found that it was of considerable benefit to me in giving my testimony, and I would advise this course wherever possible.
The next step in preparing a case is to make a careful study and analysis of sales made in the neighborhood. If much vacant property, or property practically vacant by reason of old buildings, has been sold, and you can get a line on the prices obtained, it is of very great assistance. If only improved property is sold the task is more difficult, for then you have to analyze the sales; that is, distinguish between the value of the land and the improvements.
If you have not made many sales in the locality, you will perhaps have had negotiations for property, and, I sometimes think, negotiations are of as much value as actual sales for the purpose of obtaining knowledge as to values. Failing to have had either sales or negotiations on your own account, you will find that there have been sales made by others, especially purchases and sales by operators. In times past, and even now, I have had the valuable advice of men who actually invested their money or disposed of their property. Of course, in suggesting this plan I am assuming that before any attempt is made to qualify as an expert you have had years of experience and, if not a wide knowledge of values in a given locality, at least a wide acquaintance with men whose opinions are worth more even by reason of their purchases and sales, not as brokers, but as principals.
While a competent expert may not have to adopt this plan, it is of great value to the expert in the beginning of his career and it is well to start in this way. With an experience of many years, covering every section of Manhattan and including some of the largest cases in the city, I always adopt these methods if I am not absolutely certain of my ground, feeling that a little extra work beforehand is better than to exhibit any uncertainty on the witness stand.
An appraiser should also acquaint himself as far as possible with existing leases, mortgages and projected improvements in the neighborhood of the property in question.