How do you put a price tag on a tree? Nurseries can do it, because they know what it cost to grow the tree and what profit they need to make. It’s much harder to assign a value to a tree growing out in the real world, in someone’s front yard, for example. Assigning a financial value to a tree is a complex undertaking; it requires a mix of subjective and objective considerations (in other words it’s part art and part science), explains Sherby Sanborn, a consulting arborist in Glen Ellen, California, who provides a variety of services from general tree care recommendations to tree risk assessments, and also tree value appraisals.
Most of the time, tree value appraisals are requested for insurance purposes, Sanborn explains. In recent months, many of his calls for this service have been related to trees lost or damaged by the fires in California, but other times it’s been due to trees impacted by an accident (a car hitting a tree, for instance) or vandalism, etc.
Or a tree value appraisal may be initiated by one party taking another party to court. “Maybe one neighbor cut down another neighbor’s tree,” he cites as one example. “Or if a tree had a large branch torn off by a truck, it may be necessary to determine how much value was lost.” Tree appraisals by an arborist are not accepted by the IRS, however, emphasizes Sanborn. “To claim a loss on one’s taxes, a real estate appraiser has to be involved,” he explains.
There are several different accepted methods for appraising the value of a tree, as outlined in the Guide for Plant Appraisal, produced by the Council of Tree and Landscape Appraisers. Sanborn uses one of the depreciated replacement cost methods known as the trunk formula method. “Basically, I evaluate the tree for its condition or health, and a number of other factors such as the general real estate value that the property exists in (location rating), and what benefits the tree provides — is it an accent structure, is there aesthetic value, air purification, screening, does it frame a view, is there wildlife attraction, the list is virtually endless,” Sanborn says. These are considered “contribution ratings,” and for each one that applies, there’s also a “placement rating” to determine: based on where the tree is placed in relation to the house, how much of a real benefit does it provide?
“Needless to say, all of this can be tricky,” Sanborn says. For example, if a property has 100 trees and one is lost, unless it was a particularly significant tree, its individual value may not be as high as that of a single tree on a property that’s shading the home and screening the view from the neighboring property. Or if a tree is way out in the backyard, it likely won’t have as high a value as a more prominent tree on the front lawn.
The species of the tree also impacts the value of a tree. Sanborn uses a guide from his regional ISA chapter called Species Classification and Group Assignment to help determine this. “Particularly for the trunk formula valuation method, the process involves getting the price of a 24-inch box tree (Sanborn uses the installed cost) of the same species and figuring out that that tree is worth per cross-sectional inch,” he explains. “Then for the actual tree [that you’re appraising], you take your dbh and come up with the number of cross-sectional inches, and then multiply the cost that you came up with for the 24-inch box and multiply that by the number of cross-sectional inches in the tree you’re appraising.” That gives you a basic value, and then you depreciate it for factors such as the species rating (a valley oak is a 90 percent tree, for example, while a Monterey pine is much lower), the health of the tree, and the other ratings criteria described earlier. “It’s just like a car: if your car is an accident and it’s totaled, they’re going to depreciate it for how many miles it had, its age, the condition of the tires, etc.,” he explains.
But unlike appraisals of inanimate things, such as a house, which usually relies on comparing a house with two bedrooms and two baths, say, to what another similar home in the area sold for, trees are all unique. Each tree and each setting is different, and there are also emotions involved. “Everyone loves their trees, or at least most people do,” Sanborn says. This means that appraised values can sometimes be contentious, with one party or another feeling the tree is worth more or less. “A lot of it comes down to the judgement of the person looking at the tree,” he states. Even among the experts, it can be tough to agree. Sanborn notes that the Council of Tree and Landscape Appraisers has been working to create a new appraisal guide for many years and it has been tough find a consensus on what appraisal methods are best.
The considerations outlined here only scratch the surface of the detailed calculations and expert judgement required to accurately appraise the value of a tree. It’s not surprising, then, that most in the tree care business call in an experienced tree appraiser like Sanborn when a client needs to know the value of a tree.