When determining the value of a fully-built home, there are plenty of things to consider, such as the total square feet, the number of bedrooms and bathrooms, amenities and furnishings, as well as improvements done on the property. But when it comes to vacant parcels of land, you don’t have all these different features to consider, so how do you yield its value or selling price?
Just as the process of selling land is different from selling a home, determining its value is also a unique endeavor. While not apparent at first glance, there are plenty of factors that come into the value of vacant land — and it takes an in-depth investigation to uncover them. Among the factors that affect land value, there are three most crucial determinants: location, usability, and utilities.
Location
The number one thing that affects land value is its location. Land in certain neighborhoods has more inherent than others. Your land is affected by the desirability and cost of living in its surrounding neighborhood, which can either be increased or decreased based on factors that include:
- Transportation
- Utilities
- Taxes
- Crime rates
- And more.
Naturally, the better the neighborhood, the higher the value of the properties in it. So the first and foremost thing that you need to know is how the location of your land either drives its value up or pulls it down.
When doing so, you need to know that location is not just about desirability or proximity to schools and amenities. While these are the most important factors for residential or commercial properties, you may also have to take zoning laws and location-specific factors into consideration. Some types of land, such as timber and equestrian properties are highly dependent on the details concerning their location.
Usability
One common mistake the landowners make when determining the value of their property is thinking that land acreage immediately translates to value. They think that the more acreage their land has, the more it is worth. While that is usually the case, there is something else that comes into play — whether the land is usable or unusable.
For example, a large parcel of agricultural land may be restricted in terms of usability. Let’s say only 40% of it is suitable for growing crops. In a case like this, the value of the land may decrease depending on its usability for its intended purpose. Agricultural land that is smaller in acreage may be worth more if 100% of it is usable for farming.
In most cases, the computation of land value would depend highly on how much of it is usable, whether for agricultural, commercial, or residential use.
Utilities and Improvements
While vacant land might seem empty, there are still features that can increase its value. Utilities such as electricity and water and improvements like fences, bridges, or access roads can drive up its selling price. Think of what your land already brings to the table. If there are features that are already included in the sale and that your potential buyers do not need to spend for in the future, you can price higher accordingly.
Something important to note, however, is that not all potential buyers will be interested in utilities and improvements. There is a market of consumers looking for purely raw, undeveloped land. For these types of buyers, add-ons may not be an appealing feature that warrants an increase in selling price.
Other Factors That Affect the Value of a Vacant Parcel of Land
The three factors mentioned above are the most important drivers of land value. But a full selling price cannot be determined based purely on them. Other things you need to consider include:
- The value of other properties like yours in the area
- Accessibility
- Site quality
- Soil quality
- Minerals present in the land
- Conservation factors
- Historical value
Determining the value of a vacant parcel of land cannot be left on a whim. It requires an in-depth process of crunching the numbers and getting some tests done to come up with an accurate price. It’s highly recommended that you engage a real estate agent who can help you have your land valued.
If you are looking to sell your vacant piece of land, consider working with a direct buyer and selling to Slate Land Buyers. We purchase all types of land across North Carolina. Tell us about your property and our land specialists will analyze the information to determine its value. After reaching out to us, we’ll present you with a fair, no-strings-attached, all-cash offer, within 72 hours.
