Some people have said using comps to value vacant land is a good source. How do you comp vacant land in an area where there is little to no vacant land in the surrounding area? All the land in that area have homes built on them.
Developer · Boulder, CO · Member since 2018 · 530 posts · 365 votes
3y
@Antonio Bodley
Comparable sales data is a standard way to determine the value of a site. However, as a developer, doing a residual analysis is a much more pertinent measure of value.
A residual analysis involves establishing the value of the highest and best use of the land and deducting all project cost together with a target development profit and commissions and closing costs from the total value,
The “residual” number represents the amount that can be assigned to land value under the project planned to be built on it.
Let me know if you are interested in using this method and I’ll send you a short pro forma that runs this analysis.
Rental Property Investor / REALTOR® / Property Manager · Gilbert, AZ · Member since 2023 · 384 posts · 421 votes
3y
@Antonio Bodley you will need to find comps by either searching in a bigger area and/or searching further back in time and/or searching for bigger/smaller lots. You will likely need to make bigger adjustments with any of these comps, so you will have a bigger variance than you might like, but you need to use some sort of comps.
@Antonio Bodley you will need to find comps by either searching in a bigger area and/or searching further back in time and/or searching for bigger/smaller lots. You will likely need to make bigger adjustments with any of these comps, so you will have a bigger variance than you might like, but you need to use some sort of comps.
How much time and how much distance apart could we be talking about to get an accurate comp value?
Rental Property Investor / REALTOR® / Property Manager · Gilbert, AZ · Member since 2023 · 384 posts · 421 votes
3y
@Antonio Bodley it depends, maybe a few years and the entire state and then try to find similar characteristics such as town size, parcel size, utilities access, zoning use (residential/commercial) etc. Then try to narrow it down from there.
Developer · Boulder, CO · Member since 2018 · 530 posts · 365 votes
3y
@Antonio Bodley
Comparable sales data is a standard way to determine the value of a site. However, as a developer, doing a residual analysis is a much more pertinent measure of value.
A residual analysis involves establishing the value of the highest and best use of the land and deducting all project cost together with a target development profit and commissions and closing costs from the total value,
The “residual” number represents the amount that can be assigned to land value under the project planned to be built on it.
Let me know if you are interested in using this method and I’ll send you a short pro forma that runs this analysis.
Investor · Mesa, AZ · Member since 2015 · 49 posts · 38 votes
3y
We comp a few dozen vacant properties a day.
The answer to this question will vary depending on the type of vacant land. Infill Lot vs Rural Acreage vs Commerical vs Farmland, etc.
In general, be prepared to go back up to 24 or even 36 months depending on comp density. As with most real estate, like-for-like when it comes to sellable attributes is the most critical thing in conjunction with proximity. Go out as far as you need to in order to find reasonable comps. We source most of our comps off of Zillow and Land.com using their mapping features.
Comparable sales data is a standard way to determine the value of a site. However, as a developer, doing a residual analysis is a much more pertinent measure of value.
A residual analysis involves establishing the value of the highest and best use of the land and deducting all project cost together with a target development profit and commissions and closing costs from the total value,
The “residual” number represents the amount that can be assigned to land value under the project planned to be built on it.
Let me know if you are interested in using this method and I’ll send you a short pro forma that runs this analysis.