The Property Owner Rule: Testifying About the Value of Your Own Property

In many cases involving real estate, the value of real property (whether a home, unimproved property or acreage) is of critical importance for proving loss, damages or another ultimate issue in the suit.  Most times, real estate valuation testimony is solicited through expert testimony offered by a licensed real estate appraiser or a real estate broker.

In some cases, it is cost prohibitive or otherwise impracticable to obtain expert testimony.  When this occurs, a property owner can become his or her own best witness regarding the value of property owned by them.

It is well-settled law in Texas that a property owner (including a homeowner) may offer testimony testify about the value of his property. This is the case, even if the owner is not an appraiser, real estate broker, or other expert, and would not be qualified to testify about the value of someone else’s property. This legal doctrine is commonly referred to as the “Property Owner Rule.”

Under the Property Owner Rule, a Texas property owner is generally qualified to testify about the value of his own property based on the presumption that he is inherently familiar with his property and its value. The Property Owner Rule extends to testimony from a corporate representative when testifying to the value of the corporate entity’s property, since the legal effect is that the actual owner of the property is the “person” testifying.

In 2012, the Texas Supreme Court reiterated that although a property owner may testify as to the value of his property, such opinion testimony must be based on market value, not intrinsic or some other speculative value of the property. See Nat. Gas Pipeline Co. of Am. v. Justiss, 397 S.W.3d 150, 155 (Tex. 2012). The burden of proving that the owner has based his testimony on market value can be met having the property owner testify that he is familiar with the market value of the property, and provide factual basis for the owner’s valuation. Id. Numerous Texas courts have rejected testimony from property owners when that testimony is not supported by a sufficient factual basis for the valuation opinion.

Thus, under the Property Owners Rule, it is not sufficient to simply aver personal knowledge and provide an opinion on valuation. See Justiss at 155–59. Rather, a property owner must provide the factual basis on which his opinion rests. Id. at 159. As stated by the supreme court:

[P]roperty valuations may not be based solely on a property owner’s ipse dixit. An owner may not simply echo the phrase “market value” and state a number to substantiate his diminished value claim; he must provide the factual basis on which his opinion rests. This burden is not onerous, particularly in light of the resources available today. Evidence of price paid, nearby sales, tax valuations, appraisals, online resources, and any other relevant factors may be offered to support the claim. But the valuation must be substantiated; a naked assertion of “market value” is not enough. Of course, the owner’s testimony may be challenged on cross-examination or refuted with independent evidence. But even if unchallenged, the testimony must support a verdict, and conclusory or speculative statements do not. Id. at 159.