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Buying LandSelling Land

What Factors Determine Raw Land Value?

January 23, 2018

If someone asked you, “How many acres of land are there in the U.S.,” would you be able to answer it correctly? Would you guess a million? 50 million? Half a billion?

If you answered in your head and guessed any of those, unfortunately, you’re not even close! The U.S. land area actually covers almost 2.3 billion acres. The three U.S. states with the most acres in the country are: Alaska, Texas and California.

With so many types of land to choose from in so many different locations, what do you look for when buying raw land? And what kinds of things determine its value?

Well, it all depends on who you are and what you’re looking to do with a property. According to an article by the CCIM Institute, “The valuation process essentially consists of two parts: determining the highest and best use for the land and applying the appropriate valuation technique.” It really comes down to perspective. The highest and best use for a farmer might not be the same for a developer.

There are several factors (listed below) that contribute to raw land’s highest and best use. These can include physical attributes, regulatory and legal issues, and timber value (when applicable). While these won’t give you the exact value, they are important to consider when evaluating a tract of raw land.

  • Location
  • Size
  • Shape
  • Topography
  • Soil fertility
  • Aesthetics
  • Availability of water (city or well)
  • Environmental contamination
  • Water sources (ponds, streams, etc.)
  • Accessibility
  • Road frontage
  • Sales comps
  • Zoning
  • Utilities
  • Wetlands
  • Fees

“At the end of the day, the value of property comes down to what the buyer wants and how much they are willing to spend,” said Tom Culclasure, NLR Land Professional.

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