Vacant Land - What is the best way to determine the value?

Question

What is the best way to determine the value of a land locked, vacant parcel adjacent to mine. It is a heavily wooded lot, about 3/4 of an acre. There is no direct access to it (which is probably why it has not been developed). Is there a rule of thumb for valuing land? Thanks, Marvin

John Becker · Answer

I am in the vacant land business across the US and this is what I typically do. First, call the county or city recorder, whomever holds the deeds where you live and make sure who owns the property, if there is a mortgage or not and what kind of deed they have (warranty is best). They may also have a plat map or survey for the property which could show an easement to access your landlocked property.

Next, call the county or city assessor or go on their website where they should have a property search function. Enter in the parcel number or name on the deed and see what information they provide you such as assessed value, last sale, size, zoning, etc.

You could also call the Planning & Zoning or Building Dept. and see what the allowable uses are for that property's zoning designation. They would also be able to tell you about any future plans for the area.

Then, as far as price or value, the current market determines that. Let me tell you that the country is littered with people who way overpaid for property before the recession and now want that same money back. See if your seller bought in 2005 to 2008 and you know they will have most likely way overpaid.

But, back to price, you might ask the assessor what their formula is for assessed value vs. market value as a starting point. Then hit the internet to check listings. Try the biggies, Zillow/Trulia and Realtor for agent listed properties (each gets their listings from different sources but often overlap) and then the many other websites like Landwatch for FSBO lots. This will give you an idea what similar property sellers are hoping to get in the area.

Then, to get a true approximation of value, find a real estate agent who will search the MLS for actual sales. These are prices an actual buyer has paid and if there is enough data you will see what the market will bear. The assesssor may also have this information - maybe even on their website as some do now.

Remember though, you want to leave lots of room between what the market will bear and what you pay to insulate you against unknowns. And last but not least, why do you want this property? Understand your exit strategy before you do anything and it will guide you along the way.

Marvin Gunn · Answer

@John Becker Thank you for the sage advice. I will continue my investigation.  As far as I can tell, the parcel has been passed down through the family for years (the tax assessor's site shows back to 1999). I didn't know I could use the 3rd party websites for land values (excellent tip).

Chris Hardwick · Answer

I'm replying to keep this thread on my radar. My wife and I are wondering the exact same thing about a 2.4 acre land-locked property right next door to us. We're planning to make contact with the owner soon to try and work out a deal. We're thinking replat the property into two lots and build two rentals if we can get the land for the right price.