Tree Appraisals -The Value of Trees

R.J. Laverne , manager of education and training at the Davey Institute, talks about what he does as a tree appraiser, including occasionally working in a courtroom. 

In this episode we cover:  

• How to determine what a tree is worth (0:53)
• Why find the value of your tree? (1:43)
• Trees in real estate (4:55)
• Being an objective appraiser (7:08)
• What an appraiser looks for (8:34)
• How to quantify a tree's product (11:02)
• How often do tree appraisals happen? (13:48)
• Appraisals in a courtroom (14:30)

To find your local Davey office, check out our find a local office page to search by zip code.  

To learn more about how to increase the value of your property through landscaping, read our blog Easy Landscaping to Help Sell Your Home

To learn which trees add the most value to landscapes, read our blog What Trees to Add (Or Cut Down) To Increase Property Value

Connect with Davey Tree on social media:
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Facebook: @DaveyTree
Instagram: @daveytree
YouTube: The Davey Tree Expert Company
LinkedIn: The Davey Tree Expert Company 

Connect with Doug Oster at www.dougoster.com. 

Have topics you'd like us to cover on the podcast? Email us at podcasts@davey.com. We want to hear from you!

Transcript

Doug Oster: Welcome to the Davey Tree Expert Company's podcast, Talking Trees. I'm your host Doug Oster. Each week, our expert arborists share advice on seasonal tree care, how to make your trees thrive, arborists' favorite trees, and much, much more. Tune in every Thursday to learn more because here at the Talking Trees podcast we know trees are the answer. I'm joined again this week by R.J. Laverne, he's manager of education and training at the Davey Institute in Kent, Ohio and today we're talking all about how do you appraise the value of trees. RJ, I'm told this is your wheelhouse, right?

R.J. Laverne: I have spent a modest amount of time over the last decade or so exploring this topic, yes.

Doug: From a arborist point of view, how do you quantify that, what a tree is worth?

R.J.: Well, it's kind of like asking, how do you go about assembling an automobile? There's lots and lots of tools that are needed and lots of parts that all have to go into place. Tree appraisal can be somewhat complex and depending on the type of the tree and the setting that the tree is growing in, determines what is the proper tool to use, what's the proper approach to use when you're attempting to place a value on that tree.

Doug: Why do people want to place a value on a tree? Is it they want to harvest it or what's going on there?

R.J.: Yes, so in some cases, it is because they want to harvest it. For example, appraising trees in forested areas that are intended to be harvested, logged for use in forest products, that's really in the realm of traditional forestry where we would go through and measure the trees and identify the products that those trees are best suited for and then place a value on those products.

In other cases, there are different types of trees that provide income. For example, Christmas trees or trees grown in nurseries that are intended to be picked up and sold as a one-time transaction, or another type of income-producing tree might be an orchard tree that produces apples or pears or nuts or even sap for maple syrup and in that case, you're looking at the value of the product that is harvested over a span of years. It's not simply a one-time transaction where you're selling the tree one-time but rather you're collecting valuable assets from the tree over a number of years.

Then lastly, which is perhaps the most complex approach is when you're looking at trees that are growing in maintained landscapes. In those cases, those trees are not intended to be sold for their wood or to be sold for the products that they produce. In other words, they're not income-producing trees, but rather they are valued as components to the landscape. For example, if you were selling a house and it had four bedrooms, you wouldn't sell the individual bedrooms by themselves, but rather all of the bedrooms and the kitchen and the living room all of those contribute to the overall value of the house.

In the same way, the structure of the house contributes to the overall value of the real estate. The pool in the backyard and patio in the backyard, and all of the trees and the turf and the flowerbeds, all of those individual components are not meant to be separated but they contribute to the overall value of the real estate. In those cases with landscape trees, we're trying to tease out what those individual trees contribute to the overall value of the real estate.

Doug: Can you generalize or is it a case-by-case basis where you can say having trees in the landscape around a house is a positive thing or is every case different depending on size of tree and what kind of tree?

R.J.: Sure. The short answer is you can generalize, to some extent, and there's been a number of published research articles that have found that well-maintained landscape trees on residential properties may contribute as much as 5% to 8% in some cases, as much as 15% to the overall value of the residential real estate. That's helpful as a general guideline but when we're doing appraisals, we have to approach every tree individually. Some trees are assets to a property. In other words, and in other cases, there may be trees that are liabilities. Trees that are, for example, affected with emerald ash borer and are in poor condition so they may have a negative value that is equal to the cost of what it would take to remove those trees.

Doug: I often wonder, I live in oak forest, I love living in an oak forest but it's a declining oak forest and so my arborist from Davey they're here twice a year at least, making sure that everything's right but I see it as, for me, it's a wonderful thing but I could imagine somebody else coming to look at the property at some point and seeing all these trees and saying, man, I don't want to live around all these trees. I guess that's just a personal thing when someone's looking at a property.

R.J.: Yes, exactly. Beauty is indeed in the eye of the beholder. When it comes to appraising trees, from the appraiser standpoint, we have to be independent and objective. We have to look at the trees and try to keep out the values and the objectives of other people. For example, you might have a tree in a front yard, and let's say it's a cherry tree. One person might consider buying that house and paying a little bit more for that because they love birds and they know that cherry tree is going to attract birds.

Another person might come along and offer less for that house because of the presence of the cherry tree because they see the cherries as dropping on the sidewalk and the driveway and making a mess. From the appraiser standpoint, we have to come in with an independent and objective perspective and try not to be too influenced by the borderline or external values of some people.

Doug: That's interesting. As an appraiser, how would you look at that cherry tree? What would be the specifications for you? Because I love that analogy because as a bird lover that's what I'm thinking like, oh, boy, and that cherry tree would be great but then as somebody might think about sweeping off the sidewalk where the cherry tree is. How do you look at it so scientifically, I guess?

R.J.: Sure. In a case like that, I would tend to look at the expected longevity of the tree so that a cherry tree, let's say if it's a pin cherry tree would have a lower life expectancy than say a black cherry tree. I would also look at the types of pests and pathogens that affect an individual tree species and I would consider the costs of maintaining that particular tree. If the tree is well suited for the site, it does well in that particular soil, it does well in that particular hydrology, it has relatively few pests and pathogens, it's expected to live for an extended period of time, all of those things are positive variables when it goes into assessing a tree.

On the other hand, if the tree is not well-suited for the site, it's, let's say, very sandy soils, and that tree wants to be growing in rich loams and it has lots of pests and pathogens, for example, many crabapple trees have lots of foliar problems and by the middle of the summer, all of their leaves are gone. They have beautiful flowers in the springtime but by the time June comes along, they're pretty much void of any foliage. You look at the species characteristics more so than you look at the individual values of the people that might own or buy the property.

Doug: One thing you said earlier that I was really interested in, too, are trees that are creating apples or pears or maple syrup because that has to change, I would assume, seasonally. How do you quantify that?

R.J.: Yes, and that gets to be a little bit tricky because as you say, season by season, the crop yield is certainly going to change. Even if the crop yield remains consistent, the price for that particular product could vary wildly from year to year. The way that I would go about looking at those trees that produce a crop of some sort would be to look at historical yields and historical prices, and then project that into the future on the assumption, and it might be a big assumption, that those variables are going to remain fairly consistent.

Then you ask yourself, so for this apple tree that has been producing apples for the last 20 years, how much more life expectancy can we get, can we expect out of that particular apple tree? Then you might query orchardists and say, well, how long does a typical apple tree produce at a rate that makes it worthwhile to keep that tree? If the standard answer is somewhere around 30 years, plus or minus, then you might say, okay, this tree has an additional 10 years of expectancy to produce fruit at this particular yield, how many bushels per year, based on historical data, at this price based, again, on historical data.

Then the other problem, the challenge is that you have to project that value into the future. You have 10 years of useful life of that apple tree coming in the future, but you're not going to realize that income for another 10 years, or 9 years, or 8 years, or 7 years, or you're not going to get the income for next year's apples until next year. You have to calculate what the projected value is year by year, and then discount year by year that income back to today's dollars.

Doug: Appraising trees, is this something that happens a lot? Is this something that you're asked to do or that people are asked to do a lot in certain situations out in the real world?

R.J.: I spend a fair amount of time doing appraisals, but in reality, it's a rather small set of foresters and arborists that do this kind of work. I think one of the reasons for that is that in some cases, appraisals are prepared in preparation of litigation. Previously, you asked, why would we do appraisals. I mentioned timber appraisals and income appraisals for orchard trees.

Another common reason, perhaps the most common reason that I do tree appraisals is when someone damages or destroys someone else's trees. Whether I'm working for the defendant who mis-harvested the trees or did the damage to the trees, or whether I'm doing the appraisal for the owner of the trees, it really doesn't matter to me. I have to go about the assignment in exactly the same way.

One of the reasons why I think that there are not more people that are involved in this is that it can be uncomfortable when you get to court, and you're on the stand, and you're under oath, and you're asked to explain what you did, why you did it, how you did it, and what assumptions did you use to come to your conclusions. If you're uncomfortable in that setting, then this is probably not work that you want to get into.

On the other hand, it can be really, really interesting work. If you are dedicated to doing this work at a high professional level, and you maintain your reputation and your commitment to high ethics when you're doing this kind of work, when you get to the rare incidents that the case actually goes to a court, it can be fun, actually, if you're well-prepared, but there's a relatively small number of people that do this work.

Doug: To me, that sounds absolutely terrifying to be on the stand. I know you have your facts all set up but when they try and ask you these questions and try and twist things around, and good for you.

R.J.: The lawyer's job is to represent their client to best meet the client's objectives. That's much different than the role of the appraiser. My job is to exclude the objectives of either side on litigation and focus solely on a fair, reasonable, and honest appraisal opinion. When it comes down to it, when we're doing appraisals of trees, it is an opinion. When you get to the stand, you have to be able to explain how it is that you arrived at your opinion.

Along the way, when you're working for lawyers, they will ask you to bend and shape your assumptions and your opinions so that they best meet the objectives of their clients. At times, it's very difficult to resist those pressures, but you have to stick to your guns and make sure that you're doing the work ethically.

I have a short phrase that I refer to each time that I'm working on an appraisal case, and that phrase is, seek truth. At each step along the way on the appraisal, especially when there's pressure coming in from one side or another, I return to that phrase over and over again that my job is to seek truth. It's really important to me that I do the work as honestly as possible so that more money or less money than what is appropriate and reasonable should move from one side to the other.

Doug: RJ, when I hear you talk about fair, reasonable, and honest, I love that. This has been so fascinating. I could talk all day about this. Just really, really interesting. Look at the work that you're doing and the work that's being done out there. I really appreciate your time. I very much enjoyed talking to you again. Thanks so much.

R.J.: It's always my pleasure. Thanks for your time, Doug.

Doug: I hope you enjoyed our conversation with RJ as much as I did. I learned a lot, and I hope you did, too. Tune in every Thursday to the Talking Trees podcast from the Davey Tree Expert Company. I am your host, Doug Oster. Do me a big favor, subscribe to this podcast so you'll never miss a show. If you've got an idea for an episode or maybe a comment, send us an email to podcasts@davey.com, that's P-O-D-C-A-S-T-S@D-A-V-E-Y.com. As always, we'd like to remind you on the Talking Trees podcast, trees are the answer.

[00:20:24] [END OF AUDIO]