Land appraisals are complex. They involve evaluating various factors and applying specific valuation methods to arrive at a fair market value.
With so many things to consider, it’s no wonder the Akrivis team often encounters questions about how appraisers value land, which methods they use, and various other requirements.
To help you better understand what goes into the process, let’s explore the fascinating world of land appraisals and highlight the strategies behind valuing one of your most valuable assets.
What is a land appraisal?
A land appraisal is an assessment of the value of a piece of land conducted by a certified appraiser.
Unlike a home appraisal, which focuses heavily on existing buildings and structures, a land appraisal focuses on the land itself. The appraisal will consider the vacant land’s location, size, potential uses, and other factors to develop an opinion of value.
Why do I need a land appraisal?
A land appraisal provides an estimate of the land’s market value. This information is useful if you plan on buying, selling, financing, or developing the land.
With an opinion of value in hand, you can make more informed decisions for yourself and your family based on the property’s true worth.
How is the value of land determined?
There’s a lot that goes into determining the value of vacant land. Appraisers will look at the location, size, zoning, topography, and access to utilities, among other factors. They’ll then generally use that information to compare the property to sales of similar land in the area to gauge its market value.
What factors impact the land appraisal and overall property value?
Several factors can impact the value of your land, including:
- Location. Land close to desirable areas, major roadways, and quality amenities and schools will likely be valued higher.
- Accessibility. Land that is easy for vehicles and pedestrians to access — either via roadways or public transit — often positively impacts the land value.
- Zoning. Local zoning laws may dictate what can be built on the land (residential, commercial, industrial, or agricultural), impacting its overall value and future potential.
- Size. Larger parcels of land often have higher per-acre value.
- Shape. The shape of the lot can impact usability. An irregular-shaped lot may limit development potential compared to more square or rectangular parcels of land.
- Topography. Flat or gently sloping land is easier and less costly to develop, so those flatter lots may have a higher market value.
- Soil Quality. Soil quality is a huge factor in determining land value. Good soil is important for agricultural use and can also impact development and construction projects. Soil contamination, on the other hand, may require costly remediation.
- Environmental Factors. Wetlands, flood zones, and protected areas can limit use and development of the land, impacting the land value.
- Utilities and Infrastructure. Essential utilities and infrastructure such as water, electricity, and roads, and drainage systems can boost the land’s value.
- Market Demand. Current demand for land in the area, influenced by economic conditions and trends in real estate development, can have a significant impact on the property’s overall value.
- Development Potential. Nearby developments or planned projects that could increase demand for the land could increase the overall value of the vacant lot.
- Neighborhood and Surrounding Area. The quality and reputation of the surrounding neighborhood can definitely contribute to the market value of the property.
- Historical and Cultural Significance. Historical landmarks or cultural significance can both enhance and limit land value depending on restrictions and desirability.
By considering these factors, you can gain a comprehensive understanding of what influences land value and how to maximize the potential of your property.
What is the process of a land appraisal?
Typically, the appraisal process involves a site visit, research, and an analysis of the land’s features and potential. This can take a couple of weeks, depending on the land’s complexity.
As part of the process, land appraisers use several property valuation methods to determine the value of a piece of land. The most common are the sales comparison approach, the income approach, and the cost approach.
Each method considers different aspects of the land and is chosen based on the type of land and the purpose of the appraisal.
- Sales Comparison Approach: This is the most common method for appraising vacant land. In short, you compare the subject property with similar properties (comparables or “comps”) that have recently sold in the same area. This approach is best for residential land and areas with active real estate markets.
- Income Approach. This method estimates the value of land based on its potential to generate income, likely through leasing or farming. This approach is a great option for agricultural land.
- Cost Approach. This method is less commonly used for land alone. However, it is an option when appraising land with improvements (like a new building). It estimates the cost to reproduce or replace the improvements and then adds the land value.
Akrivis offers hybrid appraisal reports that can either combine in-person exterior site visits, or be done totally online (no site visit) using our advanced technologies. Both types of hybrid appraisals are completed by a certified appraiser and compliant with USPAP standards. Our appraisals are completed and back to you in five business days or less, saving you time and money.
How much does a land appraisal cost?
Appraisal costs vary, but you can expect to pay anywhere from a few hundred to a few thousand dollars. The price depends on the land’s size, location, and the complexity of the process and appraisal.
Who conducts the land appraisal?
A certified and licensed appraiser will conduct your property appraisal. These professionals are highly trained and qualified to evaluate the value of real estate, including land.
Appraisers obtain certification and licensing from the appropriate state regulatory bodies or professional appraisal organizations, such as the Appraisal Institute. As part of their training and certification process, they undergo rigorous coursework in real estate principles, market analysis, appraisal procedures, and ethics.
Appraisers adhere to the Uniform Standards of Professional Appraisal Practice (USPAP), the ethical and performance standards for the appraisal profession here in the United States, to ensure reliable and unbiased reports.
What documents or information do I need to provide?
To get started with a hybrid appraisal at Akrivis, all you need is your contact information and the property address. Any background information, including land surveys, previous analysis, and zoning or land use restrictions, can be helpful during the process.
Can the appraised land value change over time?
Yes. An appraisal is a professional estimate based on current market conditions. While the appraisal is accurate at the time it’s conducted, market fluctuations and other factors can cause land values to change over time.
Can the appraisal be used for financing or selling land?
Absolutely. In fact, appraisals can make the process of buying or selling vacant lot smooth and efficient. Lenders can use the appraisal to determine loan amounts and buyers use the report to make informed offers.
Can I improve the value of my land before the appraisal?
Sure. Improving access, obtaining necessary permits, or clearing your land before an appraisal can potentially increase overall value. However, be sure to weigh any significant investments against expected returns so you don’t end up wasting your money.
How often should I get my land appraised?
Generally, getting an appraisal when you plan to sell, buy, or refinance is sufficient. However, if market conditions change drastically, which they are prone to do lately, a reappraisal can help you stay updated on the land’s value and make informed decisions for yourself and your loved ones.
If you’re in need of an appraisal, our team is here to help. We serve customers nationwide, providing quick and efficient appraisals for vacant and agricultural land, as well as residential and commercial properties.
Ready to get started?