How Much Is My Land Worth - Guide to Finding the Market Value of Vacant Land
One of the most common questions landowners have is "What is my land worth today?" That's because real estate is the most valuable asset that many people own. Knowing the value of land in your area is also key to answering another common question: "Is now a good time to sell land?"
In this article, find out how land is valued and learn 4 ways to determine the value of your land - including how much your land would sell for cash.
I want to know how much is my land worth - what makes land valuable?
Many of us have heard Mark Twain's quip "Buy land, they're not making it anymore." This quote gets to the heart of what makes land valuable and also why the value of land appreciates over time.
There are many factors that may make one piece of land more valuable than another. But at a high level, real estate value is a function of supply and demand. Property values increase when the demand for a certain type of land exceeds the available supply. This holds true for any type of land: residential land, commercial property, or agricultural land.
Another way to think about what makes land valuable is what economic activity it supports. To take a simple example, when the average home value in an area increases, the value of land increases too. For a commercial property like an office building, the land becomes more valuable when the landlord can charge tenants higher rent.
How an appraiser determines land value
There are three main approaches to valuing land. It's up to the appraiser performing the land appraisal to decide which one to use. But the most common approach to valuation is to see what comparable property has sold for.
Sales comparison approach
In the sales comparison approach to valuing land, the land is compared to the recent sale of similar properties or comps. This approach to land valuation relies on leveling the unique factors that specific parcels of land have. For example, one comparable property may have a septic system installed while another may not.
Size is also quite an important factor in valuing land. A small one acre property will sell for a higher price per acre than a large 100 acre property does.
Appraisers have to weigh all of these differences when valuing vacant land.
In the cost approach, property value is determined by how much it would cost to replace it. This would not be a helpful approach for unimproved land. It might be helpful in valuing land with significant improvements. For example, maybe the cost approach would be used for raw land that had costly irrigation infrastructure installed.
In the income approach, the land is valued based on how much income it produces. This might be used by an investor in valuing a commercial property with a ground lease that produces regular income. Another example might be valuing timberland based on the income that could be received from harvesting the timber.
Assessed Value vs. Appraised Value
There can be confusion about the difference between assessed value and appraised value. Assessed value is determined by your city or county for purposes of collecting property tax. It may or may not reflect recent real estate sales.
Appraised value is a property valuation conducted by a licensed real estate appraiser. The appraisal represents the appraiser's best estimate of fair market value.
4 ways to find your land value
Estimate the land value yourself
If you just want to get a rough idea of how much your land is worth, you can check comparable sales yourself. You can use a website like Zillow or Realtor.com to see sold lots in the area. You can also view land for sale, but keep in mind the property owner may not get their asking price.
On Zillow, filter 'Home Type' down to only Lots/Land. Switch the view to sold listings which appear as yellow dots.
Now you have a list of all the recent land sales. You'll have to find properties that have a similar size and characteristics as your property. There are many factors that affect the value of a vacant lot - everything from the quality of the access to the topography of the land. And keep in mind the price per acre or price per square foot is a lot different for small properties than ones with large acreage.
Valuing land is not an exact science. But once you've reviewed many sold comps, you'll start to have a feel for land prices in your area.
For more on selling land on Zillow and other websites, see our article on ways to sell land online.
Ask a real estate agent
If you know an experienced real estate agent, you can ask their opinion. This is most appropriate if you're planning to sell your land in the near future. Just make sure they have experience selling vacant lots. A real estate agent will perform a comparative market analysis, similar to the step above. The difference is that a real estate agent may have access to much more sales data in your real estate market. Real estate agents also have automated tools to find comps and speed up the process.
Hire a professional appraiser
For larger and more valuable properties, it may be worth hiring a professional appraiser. They'll use the above methods and go beyond just looking at the recent sales. An appraiser will perform a detailed review of the property, including what its highest and best use would be. This means evaluating the land use and zoning and considering if there may be another use that would be more valuable than its current use.
Request a cash offer
Another approach is to find the cash value of your land. Our company is looking for land nationwide to buy. And we're interested in any land type.
Selling land for cash saves a lot of hassle and is much faster than selling the traditional way. We can purchase most properties within two weeks of making an offer.
Land buying companies need to earn a profit, so cash offers are discounted from market value. Still, since you're researching land values you might consider requesting a cash offer as part of your research.
Frequently asked questions about land valuation
Can land lose value?
Over the long term, normally land does not lose value. However, there are certain exceptions. If the population of an area decreases over time, the land may lose value. Vacant land can also lose significant value if it becomes environmentally contaminated.
Does land appreciate?
Typically, land appreciates slowly over time. That's because it gets harder to find land as an area undergoes commercial development.
What type of land appreciates the most?
In general, commercial land has the most potential for appreciation. That's because commercially zoned land is limited by where local governments allow commercial development. It's also possible to significantly increase the value of a property by getting it rezoned for commercial use.
So, what is my land worth?
At the end of the day, a property is worth what a potential buyer is willing to pay for it. There are a number of ways to determine the market value of vacant land. But even professional opinions can't guarantee what your land will sell for or how long it will take. Ultimately, that's determined by market conditions which are always changing.