I am often asked and called upon to provide an opinion of value for a certain land property. Usually, a prospective seller is hoping to get a sense for where the land property would sell in the market if the property were to be publicly listed for sale. I usually take my time, try to walk the property if I can get to it, make comprehensive observations about location, condition of the land, features of the land, current use, potential future use, all while keeping in mind the highest and best use. I often consider such questions such as “is this a commercial development land property, a residential development land property, or is this an agricultural type of land property?”. The three methods of valuing real estate (as many know) are the cost approach, the income approach, and the comparable sales approach. If a big developer wants to build a fifty-story office tower on two and half acres in a big city, the value of that land (due to location and potential income on the property) is substantially higher than if you went out into a rural area and found two and a half acres of undeveloped residential or agricultural land.
In real estate school, we learn that brokers must never consider an opinion of value for a property to be the same as an appraisal. In fact, I was taught to never even use the term “appraisal” at all unless a professional and licensed appraiser was being called upon to value the property. I was also taught to provide a prospective seller with a range of opinion of value as opposed to one specific number or dollar amount.
Valuing land is not quite the same as valuing a building or a home, yet if a building or home is on the property, that value must be taken into consideration if the entire property were to be marketed (building plus the land). The comparable sales approach is a common method used if there is nearby land that has sold with the same zoning and similar use as the subject property. And of course, some land properties have wetlands/swamplands that are unusable which factor into the overall opinion of value. As brokers, it is our job to only provide an opinion, whereas a licensed appraiser often provides a more official and documented analysis/report of value.
If you are wondering about the value of your land, feel free to reach out to our company for an opinion. We would be happy to suggest a possible market value opinion of your land if you decided to sell.