Land Value without Closed sales data

[Dpvalue]

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

No its a newer house there and Im completing the site portion of the cost approach per the engagement letter. No new construction. Its pretty much a rural area.

 

[Dpvalue]

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.

Agreed it would be a tough task, I just did a thourougho job of explaining using 1 sale and reviewing active listings. There was only 1 sale (Which was today) in 5 years.

 

[Terrel L. Shields]

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

How far out are you looking?

 

[Functional Obs]

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

You can go farther out and further back in time. If you don't find anything, go farther out still and even further back in time. Eventually, you will find something.

You'll have to adjust the comps to address the rise or fall in the market from whatever time period you land on. Likewise, you'll have to make locational adjustments (preferably based on paired-sales). In DC and Arlington (VA) there are often tear-down or shell properties which help out a bunch.

And if you don't normally cover that particular market area, ask a Realtor who is active in the area if he or she knows of any off-market stuff (or other interesting stories involving sales where the value was really in the land and not the house).

 

[Tom D]

Have you searched thru public records. With our MLS the public records search can be for vacant ground. Now this may not tell you much except for the sale price and lot size. But with earth google you can view it from the street, if you can find it.
With low land values, there can be land sales that don't go thru the MLS system.

 

[sputnam]

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

In your appraisal classes you should have been taught about sales comparison analysis, allocation, extraction, and maybe land residual as methods for determining land value. When there are no comparable land sales... you use one of the other methods. If you don't know how to use the other methods, you probably should ask an appraiser who does... or take some remedial classes.

 

[alebrewer]

This is best in urban areas where you have lots of sales.

I think you may be thinking of allocation, Tom - which requires several sales to develop a supportable ratio. IMO, you only need the subject to perform extraction (although I know there are folks who would disagree with that).

 

[John Hassler]

I think you may be thinking of allocation, Tom - which requires several sales to develop a supportable ratio. IMO, you only need the subject to perform extraction (although I know there are folks who would disagree with that).

Include me in that camp that would disagree. Each approach to value can be completed independently of another. If you want to sharpen your Cost Approach skill, complete that approach first. This way you're not biased from the other approaches. (You can do the same for the IA to sharpen those skills.)

As to the OP, there have been several good suggestions.

Extraction is an option but in low land-to-value situation can be significantly impacted by error in valuing the improvement portion of a sale.

Lot/teardown sales is usually your best bet. Search for land sales/teardowns in other similar (proxy) communities even if many miles away. Keep records of what you did.

Your issue isn't that there are "no land sales" but a matter of how far in distance you want to go before extraction is the more credible method.

 

[alebrewer]

Include me in that camp that would disagree. Each approach to value can be completed independently of another. If you want to sharpen your Cost Approach skill, complete that approach first. This way you're not biased from the other approaches. (You can do the same for the IA to sharpen those skills.)

As to the OP, there have been several good suggestions.

Extraction is an option but in low land-to-value situation can be significantly impacted by error in valuing the improvement portion of a sale.

Lot/teardown sales is usually your best bet. Search for land sales/teardowns in other similar (proxy) communities even if many miles away. Keep records of what you did.

Your issue isn't that there are "no land sales" but a matter of how far in distance you want to go before extraction is the more credible method.

Consider yourself included.

 

[Gobears81]

Sounds like a small rural home-site - those can often be of the needle in a haystack variety, and the likelihood of them being on MLS isn't high. But these sales are out there - might be worth a trip to the courthouse. Some assessors do not sort their transfer declarations by property type, but most can run a sales report. From there, you can then pull that specific MyDec form to see if it is a "good" sale.