How Wildfires Reduce the Value of Land

The denuded hillsides have created flash floods and rock slides

 Living in California for the last 37 years, I have witnessed several wildfires and sometimes find myself traveling to affected areas.  Los Angeles County experienced unprecedented wildfires last month (January 2025), and I was able to see the Eaton fire from my home in Los Angeles, just as I remember watching the same area burn back in the mid-1990s.

The Los Angeles County Assessor is working on assessed value reductions for as many as 19,000 properties.  These “decline-in-value assessments” will be automatic, but interestingly enough, the Assessor said that these declines in value will only apply to the “Improved Values” of the affected properties, not the land values.

This presumes that land cannot burn down or be devalued by a fire because land is so permanent.

In many cases, in flat urban neighborhoods of California, if a house burns down it can be redeveloped with a more valuable one as well as two accessory dwelling units (now permitted by California state laws superseding local zoning), so it seems logical that such land would not usually go down in value.

On the other hand, in the hilly areas in the suburbs and mountains, fire can seriously reduce the value of the land, even when it is vacant.

The typical value-reducing problems include:

·       Flash flooding from denuded slopes. Live trees take up rainwater through their roots, whereas dead roots result in rain runoff continuing downhill, sometimes escalating to destructive speeds.

·       Pollution from the flash flooding, not only on the subject property, but the properties below.

·       Toxic runoff can also potentially poison wells in the area.

·       Rockslides can be particularly dangerous as storm runoff loosens the soil.

·       Particularly hot fires can actually burn all the organic matter in the soil.  This could delay the soil’s recovery for up to 20 years.

Here are some photographic examples from my work:

The home itself was built in a large clearing in the forest, but more than 90% of the trees in the surrounding 5400 acres were destroyed, and there are many dead trees upslope from the home. Also read my blog post: The Peculiarities of Appraising and Investing in Log Homes .

Behind the home you can see two years worth of rock slides plus a stone retaining wall to deflect sheet flooding from the denuded hillside above.

The creek downhill from the home is now clogged with debris from several flash floods.

The well should be tested for pollutants after several flash floods.

The ranch was originally listed for sale for $16 million before the fire, with the price reduced to $8 million afterwards.

For more information, go to my upcoming blog at www.FireAppraiser.com .

10 Mistakes that Other International Appraisers Make

 

1.     1.  No boots on the ground.

T    The above photo was taken from Isla de Mujeres, Mexico.  It might look like a fertile agricultural field from several feet above, but it was actually a mangrove swamp, as can be seen in the photo below.  One rule I insist on when I inspect is that I must actually set foot on the property, but I always tell my hosts that my client requires this so that I don't seem like a jerk. 

Sometimes an appraiser is taken on a helicopter ride for the same reason.  A property in Fiji I toured by helicopter was also a mangrove swamp, but I stayed at the nearby Sheraton Denarau Resort and took a short walk later to discover that the fertile-looking field was also a mangrove swamp. I also remember appraising beachfront property in the Dominican Republic and inspecting it on foot, discovering it to be part mangrove, while a competing appraiser was taken on a helicopter ride and steered to the wrong property to declare it to be completely solid land ready for residential construction. She may have been wearing heels.

In two cases in Mexico, the developers took me to an offsite high point to view the property, including the situation above, in which they originally took me to a tower.   In another case, in Acapulco, they pointed at the property from a main road, and I commented that the site looked landlocked.  When forced to drive me to the actual site, people came out from the nearby jungle to advocate that they were ejidatarios (campesinos who had already taken legal possession of a vacant site) who now actually owned the site.  This happens often in Latin America when vacant land becomes occupied by squatters.  The law often favors the rights of squatters over absentee gringo landlords. Who is right and who is wrong? 

2.   Getting steered to the wrong property.

Make sure you study the maps beforehand.  Sometimes a developer trying to finance a Phase 2 will show an appraiser the completed Phase 1 instead.  Caveat: If you are being shown Phase 2, be sure to see Phase 1 too.  In a couple of occasions I found that a Phase 1 was not actually built.

3.  Getting the measurements wrong.

Always check with the local municipal jurisdiction, not the fanciful maps or declarations of the loan applicant. Most foreign jurisdictions now have official ownership maps on the Internet.

4.    Getting the ownership rights wrong.

There should always be a deed or escritura.  If the owner or his/her representative is not present at the inspection, contact should still be made. In one situation in Mexico, the buyers simply presented a "power of attorney" signed by the owner in the 20th century.

5. Verifying that all development entitlements are in place.

When in foreign lands, this might entail extensive use of Google Translate on the development regulations specified on-line.  Be careful in Costa Rica!

6.  Not verifying broker-supplied information.

This applies in any appraisal assignment.  Examples: A broker selling a rural hotel site claimed there were 32 fishing tournaments per year across from the hotel.  Not true. The closest tournament was several miles away on an island in which the fishermen simply brought their RVs (recreational vehicles) to stay in.

7. Footwear.

In many cases you will need boots.  You might be criticized when saying "I can't walk on that!" Then someone might say that you refused to see the best part.

8. Not meeting and verifying the owner.

This is similar to proviso #4 above. At the worst you may be enabling an illegal sale; you may also discover that the owner and buyer are related parties.  Besides, if the owner knows the most about the property, shouldn't you talk to him or her?

9.   Not consulting Google Earth.

We have been warned about crooked realtors, crooked property owners, crooked inspectors, crooked appraisers, etc., but who suspects the land surveyor?

His measurements were:

Cliff top (highlands) 446,328 square meters 

                                                                Cliff face                  257,242 square meters 

                                                                Beachfront               426,430 square meters 

To                                                           Total          1,130,000 square meters (113 hectares)

     The above is the site map for a beachfront hotel.  Now let us look at the Google Earth map.

While the surveyor measured beachfront area as 42 64 hectares (about 94 acres), Google Earth measured all land at less than 50 feet in altitude as 34.45 acres, and the mountains are considerably closer to the water than in the survey map.  What is even odder is that 25.72 hectares were assigned to cliff face area, which is horizontal. I have never seen this done by a surveyor before.

      10. Failure to use language translation applications.  Google Translate is what I use, but I understand that Bing also offers such.  Google Translate is not 100% perfect, but it has been solid for me in translating Spanish, and I have also used it for Portuguese, French, German, Korean and Chinese. The Asian languages are more difficult to translate. Years ago I found GT through an unlikely source, a mortgage broker who couldn't speak Spanish but was insistent about dating Colombian women.  He had a computer terminal at home which was constantly set at Google Translate. He was a happy man.

      11. 

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