Vacant land is property that is not occupied and currently not being used. The land may have some utilities and off-site improvements that differ from raw land that has no structures or improvements. Appraising a vacant piece of land is a very complex process and best if completed by a professional. Just a few of many factors that are considered when determining the value of vacant land are how it is zoned, how or if it can be improved, and what is its best use.
Many believe that vacant land is the easiest to appraise; this is not true. With property that has been improved, the best and highest use of the land is determined by the improvements, and with vacant land anything is possible. The land could be improved to anything from a power plant to a residential subdivision. Whether or not a piece of vacant land is buildable will most likely have great impact on its value.
There is no one formula used to appraise vacant land, because there are so many factors that depend on the market and the land. There are a few different ways to approach vacant land appraisal and some guidelines to follow.
Steps to appraising vacant land include:
- Finding location of property. Check with the office in charge of the zoning ordinance to find the property. They will be able to disclose if and how the property could be improved, its highest density and requirements involved. One example would be that a property is zoned for rural residential that can be improved with a single family home plus one other structure.
- Be familiar with the guidelines for each type of development. Land is categorized as rural, multi-family residential, commercial, residential or industrial. There are specific guidelines for each type of property.
- Consider the fact that the higher density property is typically more valuable. Commercial land normally has the greatest value while agricultural and rural lands both have the least value. Industrial and residential type lands fall into the middle.
- Compare similar property. Compare location, size, zoning and physical features to determine an estimate of your property against others. Valuations for vacant land are typically made by either price per square foot or price per acre.
- Analyze the sale of other vacant land near to your land. Determine the land’s value by the sale that is seen as most similar overall and not on the average of its sale.