Eminent Domain Residue Valuation: A Framework for the Hold-Out-or-Sell Decision

When a partial taking leaves you with a residue parcel and an assembler comes knocking, how do you advise your client? Hold out for a better offer, or take the money now?

There's no standard methodology for this. Appraisers can tell you what the parcel is worth today. They can't tell you what it's worth to a specific buyer, or what happens to that value if your client waits.

A recent Delaware County engagement forced me to build a decision framework from scratch. The answer surprised everyone, including me.

The Setup: A Corner Parcel After a Highway Taking

My client owned a 2.5-acre residue parcel at the corner of a new highway and a county road. An assembler who'd acquired the adjacent properties made an offer. The question: accept it, or hold out for a future user who might pay more?

The intuition was to hold out. Corner parcels at highway intersections should command a premium. Why sell now when the road isn't even finished?

But intuition isn't methodology. I needed to build a defensible framework that compared net proceeds under both scenarios.

The Holdout Scenario: What Could They Get on the Open Market?

For the holdout analysis, I started with comparable transactions. A residential sale on the same road closed at roughly $143,000 per acre. A commercial parcel nearby was under contract at $211,000 per acre. That gave me a floor and ceiling for standalone value.

After adjustments for the irregular configuration (a standard 10% deduction for odd-shaped parcels), the math looked like this:

• Holdout floor: ~$308,000 net (residential use, after broker commission)
• Holdout ceiling: ~$456,000 net (commercial use, after broker commission)

The ceiling assumed the property could be rezoned and marketed for commercial development. That's where things got complicated.

The Problem in the Documents

The taking documents stated the property retained frontage on both the new highway and the county road. Over 778 feet of highway frontage. That sounds valuable.

But something didn't add up. The appraisal mentioned "limited access" in passing, almost as a footnote. If true, that 778 feet of highway frontage was worthless for vehicular access. The property's only access would be the 183 feet on the county road.

I called the Delaware County Engineer's office to verify. Five minutes on the phone confirmed it: the highway was designated limited access under Ohio Revised Code Section 5511.02. No curb cuts, no driveways, no vehicular access. The 778 feet of frontage provided visibility and nothing else.

This changed everything.

The Catch-22 That Kills the Holdout Strategy

Here's what a holdout buyer would face:

The property is currently zoned residential. To justify a commercial price, a future buyer would need to rezone it. But the rezoning process triggers traffic review by the County Engineer, who has authority to impose access restrictions as a condition of approval.

The property sits near a major roundabout. The County has already restricted left turns on the county road during peak hours. The approved development on adjacent parcels requires all construction traffic to use the highway, not the county road. The pattern is clear: the County is limiting traffic on this road.

A standalone commercial buyer faces a double bind. They need commercial zoning to justify paying a premium price. But the rezoning process could restrict or eliminate the very access that makes the parcel developable.

The holdout strategy's ceiling depends on commercial value. But pursuing commercial value could destroy the access that makes commercial development possible.

This catch-22 doesn't apply to the assembler. They can design internal circulation across their larger site, distributing traffic and satisfying the County Engineer. The access restriction risk falls away when the parcel is absorbed into a larger development.

The Assembler Scenario: What's the Premium Worth?

Assemblage premiums typically average 18% for standard transactions. But this wasn't standard. The assembler had alternative access through other parcels and didn't strictly need this corner. The premium was based on consolidation value, not access necessity.

I built a range:

• Assembler floor (35% premium): ~$548,000
• Assembler ceiling (100% premium): ~$812,000

The floor assumed modest value for clean site consolidation. The ceiling assumed the assembler placed significant value on the corner position and avoiding a holdout owner in their project footprint.

The Decision Framework

When I laid out the scenarios, the answer was clear:

ScenarioNet ProceedsHoldout Floor$308,000Holdout Ceiling$456,000Assembler Floor$548,000Assembler Ceiling$812,000

The holdout ceiling ($456,000) fell below the assembler floor ($548,000).

Even in the best-case holdout scenario (commercial rezoning, no access restrictions, quick sale), my client would net less than the worst-case assembler offer. And the holdout scenario carried execution risk the assembler offer didn't.

The math didn't support holding out.

What the Documents Don't Tell You

The taking documents said the property retained highway frontage "without limitation of access." Read literally, that sounds like full access rights. But it referred to the county road, not the highway. The highway's limited-access designation was buried in a different section of the appraisal.

The attorney had been negotiating based on the documents. The documents weren't wrong, exactly. They just didn't say what they seemed to say. Without the call to the County Engineer, everyone would have continued assuming the highway frontage was an asset. It wasn't.

This is why eminent domain residue valuation requires more than reading documents. Someone has to ground-truth the assumptions. Someone has to pick up the phone and ask the questions that reveal what the documents don't say.

The Methodology

When there's no standard framework for a problem, you build one:

1. Establish comparable baselines for standalone value
2. Identify the constraints that affect each scenario differently
3. Ground-truth the documents by verifying critical assumptions
4. Model net proceeds after transaction costs and holding costs
5. Compare floors and ceilings across scenarios, not just midpoints
6. Identify asymmetric risks that affect one scenario but not the other

The catch-22 in this case (rezoning triggers access review) affected only the holdout scenario. The assembler absorbed that risk. That asymmetry drove the recommendation.

When to Hold Out

This framework doesn't always favor the assembler. Hold out when:

• Your holdout floor exceeds the assembler ceiling
• The residue has independent utility that doesn't require rezoning
• Access restrictions don't apply to your parcel
• Time is on your side (appreciating market, no holding cost pressure)

Sell to the assembler when:

• Your holdout ceiling falls below the assembler floor
• Realizing the holdout value requires entitlements that carry risk
• The assembler can absorb constraints you can't
• The assembler's timeline creates urgency you can exploit

About the Author

Jay DeVore is a licensed Ohio architect and real estate developer with an MBA in Real Estate Finance. He provides expert witness and consulting services for eminent domain, development feasibility, and real estate disputes. His practice focuses on problems that require building defensible frameworks from scratch.

Contact: jay@dev.partners | (614) 314-7318

If you're working on a partial taking with residue valuation questions, I'm happy to discuss whether this framework applies to your situation.

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