The question of value is something that people selling and buying lots and acreage for sale struggle with. What makes one piece of land more valuable than another? You must consider this question: is the land a better value because it has more features, or is it a better value because it’s cheaper? Some additional questions and considerations about property value should be: is this parcel more valuable because it’s closer to a city, or is this other property better because it has a beautiful view? What if a piece of land has neither of these things, but it is close to land your family already owns?
The simplest explanation of the market value of a home site is that it is worth whatever people are willing to pay. If someone is willing to pay $10,000 for a piece of property, that property is worth $10,000 and it is assumed that all properties around the first parcel are also worth around $10,000. A few months later, a property several miles away may sell for $5,000. The parcels between these properties are re-valued at $7,500, between the two prices. This system of basing land values on nearby, comparable sales is something that real estate agents frequently use to place a value on a piece of land. But this is really little more than an educated guess.
Local governments also involve themselves with property values. They look at the market value of the property based on the last time it sold or on comparable sales in the area. They then use that market value to come up with an assessed value. The assessed value is often a percentage of the full market value. This assessed value is what the county uses to determine how much they will charge in property taxes on that piece of property. Sometimes the county looks at the market values every year and adjusts the assessed value accordingly, and sometimes they will only re-evaluate a property when it sells. The assessed value might lag far behind rapidly changing market values an area.
When you are looking to buy a piece of property, it is good to look at all these types of value: market value, assessed value and comparable sales. They can all be important tools for figuring out what a piece of land is worth. But it is even more important to look at what the land will be worth to you, personally. Finding a piece of land that you will use and enjoy is much more important than looking at a particular price range.
To find the perfect piece of land contact a member of the Gratia Group Land Sales Team at (239) 333-2221.