I had an opportunity to talk with someone recently about how to value land.
This fellow had a piece of property that he was asking me to look at. It was just down the road from another parcel that had just recently sold. These two pieces of land were similar. They were the same size, had the same zoning, same school district, same jurisdiction. As far as he was concerned, everything was the same and he assumed his parcel should sell for the same price as the other that just sold.
When I sent them my opinion of the value of the land, he was kind of upset with me, as if I was trying to pull a fast one on him. He started to tell me how I was way off and kept pointing to this other property that had sold close by.
I took the time to show him why I came to the conclusion that I had.
We went through both pieces of land. We compared apples to apples.
His property did not have complete utilities which the other property did.
I will have to pay for frontage improvements which were not necessary for the other property.
The topography on each piece was completely different, so I would have to spend additional money and the lots will sell for less.
There was an arterial road that was required to be added right through the middle of the parcel. I would not only lose the land due to the road but would also have the loss of buildable land because I won’t be able to build driveways coming off of this road.After comparing both pieces of land, pointing out all of the things that make these two seemingly similar pieces of land different, I took the price of the property that had recently sold and I plugged in all the costs and challenges that his property was going to have. He started to see why there was a difference between these two parcels.
After all that, the price of his property was substantially lower than the original price I had given him.
My point is, at the end of the day, no two pieces are the same and you have to look at each project individually.
Don’t just fake it! Get educated in land in order to know how to value those projects.
Are you ready to start putting your own land deals together? We can teach you how with our course, Land Deals Revealed! The best place to start is by watching our presentation video here: https://shrtlnk.co/KuwiM
We also have a course geared towards realtors called Land Listings Unleashed. Learn how land deals work in order to be an expert for your clients. Take a look at our video presentation here: https://shrtlnk.co/YCy6d
Posted by Cody Bjugan – VESTRIGHT on Tuesday, August 25, 2020
I had an opportunity to talk with someone recently about how to value land.
This fellow had a piece of property that he was asking me to look at. It was just down the road from another parcel that had just recently sold. These two pieces of land were similar. They were the same size, had the same zoning, same school district, same jurisdiction. As far as he was concerned, everything was the same and he assumed his parcel should sell for the same price as the other that just sold.
When I sent them my opinion of the value of the land, he was kind of upset with me, as if I was trying to pull a fast one on him. He started to tell me how I was way off and kept pointing to this other property that had sold close by.
I took the time to show him why I came to the conclusion that I had.
We went through both pieces of land. We compared apples to apples.
- His property did not have complete utilities which the other property did.
- I will have to pay for frontage improvements which were not necessary for the other property.
- The topography on each piece was completely different, so I would have to spend additional money and the lots will sell for less.
- There was an arterial road that was required to be added right through the middle of the parcel. I would not only lose the land due to the road but would also have the loss of buildable land because I won’t be able to build driveways coming off of this road.
After comparing both pieces of land, pointing out all of the things that make these two seemingly similar pieces of land different, I took the price of the property that had recently sold and I plugged in all the costs and challenges that his property was going to have. He started to see why there was a difference between these two parcels.
After all that, the price of his property was substantially lower than the original price I had given him.
My point is, at the end of the day, no two pieces are the same and you have to look at each project individually.
Don’t just fake it! Get educated in land in order to know how to value those projects.
Are you ready to start putting your own land deals together? We can teach you how with our course, Land Deals Revealed! The best place to start is by watching our presentation video here.
We also have a course geared towards realtors called Land Listings Unleashed. Learn how land deals work in order to be an expert for your clients. Take a look at our presentation video here.
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