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Presenters INTRODUCTION Stephen T. Crosson, MAI, SRA Drew K. Kapur, Esquire

Introduction What we’ll cover: –Basic considerations for valuation expert –Presentation of mock case, with both direct and cross examination of expert  Expert will provide both strong and intentionally weak responses, which will be exploited and explained by Mr. Kapur during course of testimony  Alternative responses described and explained 2

Case Facts: –Eminent domain (2 scenarios)  Partial taking - 10,000 SF along frontage, including drive and 20 parking spaces; temporary construction easement (1,000 SF for 1 year)  Taking of the entirety  State rule assumed (just compensation = taking + damages to remainder) 3

Case Facts: (continued) –Property  200 unit apartment complex  150,000 SF NRA  120 units-1BR/1 B  80 units-2BR/2 B  300 parking spaces  Built in 1985; estimated remaining economic life 10 years  Site  8 acres (348,480 SF)  Zoned for high-density commercial; improvements legally non- conforming 4

Case Sales Comparison 5 SUBJECT Sale Comparable Adjustment Grid Comp No.Subject12345 Date of Sale-11/142/155/151/1504/15 Year Built No. of Units Avg. Unit Size ,058 NOI/SF$4.40$4.83$3.80$4.47$4.71$5.47 Sale Price per SF-$67.14$57.45$63.82$66.88$74.12 Market Conditions-Similar Slt Sup Location-Similar InferiorSuperior Age-Slt Sup SimilarSuperior Overall Size-SimilarSlt InfSimilar Condition-Slt SupSimilar Slt Sup Economic-Similar Indicated Value of Subject should be… -Slt LowerSlt HigherSimilarSlt LowerSig Lower 150,000 (Rd.)

Case Income Capitalization 6 PlanNo. of Units Avg. Unit Size (SF)Cumulative SF Potential Monthly Rent / SF Total / Avg ,000$0.75 / SF POTENTIAL GROSS MONTHLY RENTAL INCOME$112,500 $1,350,000$9.00 Less: Physical Vacancy (10%) 135, Subtotal 1,215, Plus: Other Income 30, EFFECTIVE GROSS INCOME $1,245,000$8.30 Less Expenses: Taxes 241, Insurance 22, Management Fee 37, Administration / Salaries 69, Utilities 30, Repairs / Maintenance 120, Marketing 10, Replacement Reserves 40, TOTAL EXPENSES $569,500$3.80 NET OPERATING INCOME $675,500$4.50

Case Value conclusions (Whole property) –$9,625,000 –Site-as if vacant ($7,650,000 ($22/SF) 7 Subject’s NOI$675,500  Overall Rate Equals 7.00% $9,642,857 Indicated Value by Income Capitalization $9,650,000 (Rd)

Case Value conclusions (Taking) –Site$220,000 –Improvements (paving, ext. lighting, and signage)25,000 –Temporary construction easement 1,320 –Value opinion of taking246,320 –Damages to remainder (15 units x $15/mo. x 12) ÷ 7% 38,571 Value opinion (taking + damages)$284,891 8

Testimony (Direct and Indirect) Questions and answers provided verbally 9

Essentials for Expert Witnesses Understand the case –Issues being tried –Motivations of parties –State rule or federal rule –Jury or bench trial 10

Essentials for Expert Witnesses Understand relationships –Expert-court  Role is to inform the trier(s) of the case –Expert-attorney for client  Attorney’s role is to assist expert in effectively communication various opinions re: the matter at hand  Expert’s role is to advocate his/her opinions in clear, convincing terms; not to advocate client’s position 11

Essentials for Expert Witnesses Understand relationships (continued) –Expert-opposing attorney  Expert’s role is to answer questions truthfully but not to allow opinions to be miscast and misrepresented  Role requires composure and professionalism by expert in face of attempts to discredit testimony  In responding to questions, treat opposing attorney as slow-learning student rather than foe who must be defeated. 12

Essentials for Expert Witnesses Extensive preparation is imperative. Cannot overstate importance. –Rehearse direct testimony with counsel. –Anticipate questions on cross and develop responses Communicate in terms that laymen (judge and jury) may understand; avoid highly technical explanations and terms 13

Essentials for Expert Witnesses Do not spar or invoke sarcasm with opposing attorney; will not be well received by judge/jury. Effective expert must be credible and likable to triers. Look at judge/jury, not attorney, in responding to questions. Take no materials to stand. Attorneys will provide. Any other material is discoverable. 14

Miscellaneous Learned Treatises –The Appraisal Institute, The Appraisal of Real Estate (14th ed.) –The Appraisal Institute, Real Estate Valuation in Litigation (Eaton) –Uniform Appraisal Standards for Federal Land Acquisitions (Yellow Book) –The Appraisal Foundation, Uniform Standards of Professional Appraisal Practice (“USPAP”) 15

Miscellaneous Learned Treatises (continued) –SEAK,The A-Z Guide to Expert Witnessing –SEAK, How to Become a Dangerous Expert Witness –SEAK, Cross-Examination: The Comprehensive Guide for Experts –SEAK, A Winning Case-How to Use Persuasive Communication Techniques For Successful Trial Work –SEAK, Writing and Defending Your Expert Report 16