The fair market value of improvements pertaining to realty is generally determined through obtaining appraisal reports. Ultimately, the jury decides value if the parties cannot reach settlement prior to trial. Generally, goodwill is valued based on the sustainable income flow generated by the business. How that income translates into goodwill value is determined through experienced eminent domain business appraisers. Generally, value varies based upon factors such as length of time in the business, nature of the industry, customer base, economic conditions, reputation, security of occupancy, nature of the business' fixed assets, and risk associated with the business.
Some businesses possess no goodwill value.
Others may possess thousands or even millions of dollars of goodwill value. It is very important in eminent domain cases to work only with business appraisers who are experienced in eminent domain valuations. Hiring inexperienced eminent domain counsel or an appraiser inexperienced in eminent domain matters can be a very costly mistake. Thus, a business owner generally must take reasonable steps to try to relocate the business if the relocation would result in retention of all or some of the business' goodwill value. However, it should be noted that even if a business is relocated, it can still suffer a loss of goodwill.