Silberstein v. Trustmark Nat’l Bank, No. 14-14-00660-CV, 2016 Tex. App. LEXIS 108 (Tex. App.—Houston [14th Dist.] Jan. 7, 2016, pet. denied)
In this appeal of a real estate valuation dispute, appellants challenged the legal and factual sufficiency of the evidence supporting a jury’s determination of the fair market value of ten single family homes used as income properties as of the date of foreclosure. At trial, the appellants’ expert presented income valuation evidence, and the appellee bank’s expert presented evidence based on the sales comparison approach and the cost approach. The appellee bank also offered into evidence a spreadsheet showing how it calculated its winning bids at foreclosure auction. The jury determined fair market values for each property that were identical to the foreclosure bids made by the appellee.
The court of appeals held that, while the approach is generally favored by courts, the comparable sales approach evidence presented by the appellee bank’s expert witness in this case was not probative evidence because many of the sales were foreclosure sales and no adjustments were made to account for the fact that the sales were not arm’s length transactions. In contrast, the court of appeals found that the income approach presented by the appellants’ expert was appropriate because the ten properties were utilized for income generation. While the court of appeals did not sustain the appellants’ legal sufficiency challenge because the appellee’s expert testimony on the cost approach constituted some competent evidence of fair market value, the court of appeals did sustain the appellants’ factual sufficiency challenge. The court held that the income approach presented by the appellants and the cost approach presented by the appellee’s established a range of fair market value evidence that was presented to the jury. Because the jury’s determined fair market values did not fall within this range of competent evidence, the jury’s findings were contrary to the overwhelming weight of the evidence and were clearly wrong. Accordingly, the court of appeals reversed and remanded to the trial court.