How to Determine the Value of a Tree on Your Property: (Part 2)

Many reasons exist why you might need to determine a tree’s value. For example, if a tree comes down on your property, you can sometimes recapture its monetary loss through an insurance claim or by taking a tax deduction. Before doing either of those things, you will need to determine the monetary value of the tree. By looking at the right tree factors, you can determine how much to claim or deduct.

Three methods are commonly used to evaluate trees—the Cost Approach, the Income Approach, and the Sales Comparison approach. For a more detailed description of each method, refer to the Guide for Plant Appraisal (10th edition). Many arboriculture and horticultural groups endorse this publication as a reliable resource for evaluating trees.

Below, we briefly describe each evaluation approach.

• The Cost Approach focuses on the plant, location, and species as depreciation factors.
• The Income Approach uses the produce value in the future, such as in fruit or nut production, to assign a tree’s value.
• The Sales Comparison Approach considers the increase or decrease in your property by the plant’s presence. 

Each method has its way of determining a tree’s value. Take the Cost approach. Four ways exist when using this approach—the Replacement Cost method, the Trunk Formula method, the Cost of Repair method, and the Cost of Care method. 

Each method has its strengths and weaknesses. For example, the Trunk Formula Technique (TFT) is among the popular approaches when using the Cost Approach method. This technique employs the unit tree cost formula to determine value. You want to use the method and approach that best fits your situation.

Determining the value of a tree on your property can be a challenge. You need the right training, expertise, and experience to do the job right. So, evaluating the tree yourself may not be in your best interest

That’s why hiring a professional, like a registered arborist or RI Tree, to develop an appraisal makes sense. Consulting a professional can give you a better understanding of the pros and cons of each approach and help you choose the correct method for your situation.