Land Value without Closed sales data

[Dpvalue]

I have a question what do you use to conclude land value when there are no closed sales or what method do use to support value

 

[Terrel L. Shields]

So, no land nowhere has ever been sold there? Like say 6 years ago a lot sold for $100,000 and you cannot then make a time adjustment? No one requires you to use only sales under six months old.

What about 'tear downs"? Surely, someone has bought a site and tore down the building and built anew, right? The tear down is worthless, so the land is the net. Classically, that is net after cost of demolition, but I find tear downs seem to sell for about the same as vacant lots.

Extraction also works. You estimate the value of the dwelling and subtract from the sale price.

This is accomplished basically by estimating the RL, TEL, RCN and working from there. You estimate the Effective age from doing extraction from similar sales where you can determine land value. Once you know the contribution of the building, subtract and your land value is the remainder.

 

[Dpvalue]

Thanks I did consider the Extraction Method. It is a rural area pretty much and there has been no recent land sales. I did find one just now and was analyzing it against my lot It sold for $84,000K and it sits on an 1.25 Acres and closed today. My lot is only 12,632 Sq Ft. This is the only land sale I have found. I did review the active land sales a lot half that size is selling actively for $49,000. Im thinking $30,000 for my lot honestly but I want to make sure I expalin that using paired sales one closed and one active was what determined the opinion of land value given

 

[J Grant]

Thanks I did consider the Extraction Method. It is a rural area pretty much and there has been no recent land sales. I did find one just now and was analyzing it against my lot It sold for $84,000K and it sits on an 1.25 Acres and closed today. My lot is only 12,632 Sq Ft. This is the only land sale I have found. I did review the active land sales a lot half that size is selling actively for $49,000. Im thinking $30,000 for my lot honestly but I want to make sure I expalin that using paired sales one closed and one active was what determined the opinion of land value given

In my experience, land prices tend to be more stable over time than home prices are - (or one can make a time /market condition adjustment ); therefore, using a lot sale that is 2, 3, or 4 years old could be relevant. How far back did you search?

 

[Dpvalue]

In my experience, land prices tend to be more stable over time than home prices are - (or one can make a time /market condition adjustment ); therefore, using a lot sale that is 2, 3, or 4 years old could be relevant. How far back did you search?

I went as far 2019 and no closed land sales for residential use was found. All Argicutlure and industrial sales during that time frame

 

[J Grant]

I went as far 2019 and no closed land sales for residential use was found. All Argicutlure and industrial sales during that time frame

Then you are using what you have, and your conclusions sound reasonable - you can also use the assessed land values and/or extraction as additional support.

 

[Dpvalue]

Thanks you very much for your responses they are indeed enlightening!

 

[David S]

Then you are using what you have, and your conclusions sound reasonable - you can also use the assessed land values and/or extraction as additional support.

Agreed. We didn't create data and value. We just extract the data, analysis the data, then drive to value conclusion. So if you can't get the data, you can't conclude the value. If you really can't find any relevant data, the last resort will be survey. Which mean you have to do a poll to the buyer, seller, buyer's agent, seller's agent, CPA, attorney, investor, builder, peer appraiser, contractor etc. Not sure doing this kind of survey on the social media will count. Then use this data to conclude your value opinion. Of cause it will take longer time and higher cost. Just bill your client.

 

[Tom4value]

I went as far 2019 and no closed land sales for residential use was found. All Argicutlure and industrial sales during that time frame

Ha! Everyone said the “extraction method”. This is best in urban areas where you have lots of sales. You have a harder task due to the location. You have a harder HBU determination. Am I assuming that you have to use the cost approach? If not, say why. If you do, go as far as you have to. You can’t make up land sales or use assements.

 

[shrubberyvaluation]

Look for new construction developments, what did they buy the land for? Look for teardowns.