Vacant land can prove to be a very profitable asset for both a buyer and a seller, but how exactly do you value vacant land?
Vacant land is valued by a buyer and seller based on its location, condition, features, and size. You can get an approximate figure for the value of your land through a digital land calculator or you can get a more precise valuation by hiring a professional land appraiser to assess your property.
Regardless of whether you are a buyer or a seller, having land can prove to be an incredible financial opportunity. The real estate market has been one of the most profitable industries out there - given that we have continued to see a steady increase in property values over the years. If you play your cards right, getting into the real estate game can be the financial investment of a lifetime, which is why you are going to want to know how to properly value vacant land. You can do this by carefully assessing the qualities of the vacant land that is on the table. As you review its features, you should be able to piece together its final price, but you want to ensure that you evaluate the vacant land properly so that your valuation is legitimate. To help you understand how to value vacant land as a buyer and a seller, we are going to take you through our land valuation process.
After decades of working within the real estate industry, I have had a lot of in-depth experience dealing with both sides of vacant land acquisitions. My experience has taught me that the best way to get the optimal price for vacant land is to carefully weigh out all of the land’s features and qualities.
Vacant Land Valuation: Seller & Buyer
The truth is that the process of evaluating vacant land is very similar for both the buyer and the seller. The reason for this is that the land qualities that determine the cost of land are virtually identical for both parties. At the end of the day, it is the features of a parcel of vacant land that determine its overall value, which is why you want to have an in-depth review of the property and all of its assets so that you are leaving no stone unturned.
If you have had some experience in dealing with real estate before, you should be able to make educated assumptions of how much a vacant land parcel will be simply by reviewing the property personally. While you are assessing the vacant land, you should be compiling a list of land features that are favorable that will increase the value of the property. You can then take this information and compare it with other properties in the area to get a final estimate. The best way to do this is to consult a real estate agent or utilize an online land valuation calculator.
However, while these approaches are great for getting a general idea of what the vacant land is worth, you may want to consider getting a more professional valuation so that you can get a precise figure instead of a rough estimate. The reason you may want to do this is to ensure that there are no land qualities and conditions that you may have overlooked. The best way to get a professional valuation is to hire a land appraiser to come to take a look at the vacant land.
This is an incredibly important step in determining the cost of the vacant land for both the buyer and the seller, as you will be able to have a figure that is legitimate and backed by a professional. A land appraisal can cost as much a $1,000 or even more in some cases, but the benefit of having a professional estimate can result in saving thousands of dollars on your offer or on your listing price, which is why we highly advise opting for an appraiser. Let’s take a closer look at some of the qualities you are going to want to assess when determining the value of vacant land as a seller and buyer.
There is no factor more important for determining the value of vacant land than its location. Any real estate investor will tell you the location is everything, which is why you want to carefully assess the location of the vacant land and all factors that make it attractive.
The location of the vacant land can be a dynamic quality to review, as there are so many things tied to a property’s location that can increase or decrease the value of the vacant land. The biggest factors are whether the vacant land is located in an urban or rural area. We are going to examine each location type in detail to see how this will affect the value of the land.
We have found that vacant land parcels that are located in urban areas tend to have higher property values. The reason for this is that most people tend to want to live in an urban neighborhood due to it having qualities that make life more convenient and practical.
Vacant land parcels located in urban areas are assessed primarily by the quality of life in the area, but also by how stable the local economy is. The local job market of an urban area greatly influences the cost of living, which can either increase or decrease the price of rent and also the value of any vacant land parcels in the area. If the local economy is strong and has a stable industry with good job security, then many people will want to live in this city, which will drive the demand for property acquisitions. On the other hand, if the local economy is struggling and is declining, then you can expect the value of the vacant land to follow suit.
In addition, a vacant land parcel in an urban environment can also increase in value depending on what its surroundings are. A major factor for this is dependent on the general location of the vacant land. A key feature to look for is if the vacant land parcel is in an attractive neighborhood. If the neighborhood of the area is nice, then you will likely see significant increases in the value of the vacant land. However, if the neighborhood has poor qualities, you can expect this to be reflected in the final price of the property.
Another great influence on the value of vacant land is what sort of amenities and activities are located near the property. Many people strive to live in urban areas that have features such as entertainment. The following amenities have been known to increase the value of vacant land parcels:
- Public Parks
At the end of the day, vacant land parcels that are located in urban areas have a lot of potential factors that can greatly increase the value of the property. To get an estimated figure, you should weigh out all of the positive and the negative location qualities of the urban environment when calculating your valuation.
There are plenty of vacant land parcels located in rural areas. You probably see a lot of them as you pass by small towns in the countryside or perhaps even in the middle of nowhere. Vacant real estate in rural areas can be a bit of a wild card and are often harder to predict and valuate.
The reason for this is that most vacant lands located in the countryside do not have any immediate qualities that drive up the cost of the property, which is why we often see land prices that are staggeringly low in rural environments.
With that being said, this is by no means always the case with rural properties. Much like with a city a rural property’s value is determined by a lot of its location qualities. If the vacant land is located in a place that has promising features such as a stable economy in a nearby town or a climate that is desirable for many buyers, then you can expect the price of the property to increase significantly.
This can especially be the case if vacant land is located in a rural area that is within a reasonable range of a thriving city. However, if the rural area of the property is located somewhere that is not desirable, you can expect this to greatly decrease the value of the vacant land.
When it comes to land valuations size does matter, which is why one of the first things you will want to look at is the dimensions of the vacant land. It goes without saying that the larger the property the higher the value of the vacant land. Regardless of whether you are buying or selling vacant land, you are going to want to know the exact dimensions of the property, which will be measured out in square feet.
If you happen to know exactly how many square feet the property is and have an estimated figure for what the dollar amount per square foot is for the vacant land, then you can begin to calculate a rough measurement for the property. An easy way to start this process is to simply get measuring tape so that you can get an estimate on your own. If your vacant land is relatively small, you should not have an issue getting an idea of the dimensions of your parcel.
Once you have measured out the width and length of your property, simply multiply the two numbers together to determine the square footage of your vacant land. You then take the number of square feet of your property and then multiply it by the dollar value of each square foot, which will give you your final price.
While this approach does work, it is not quite as precise as what you may want. This can be especially challenging if your property is large in size or has complex dimensions. In this case, you may want to consider hiring a surveyor to come to give you a professional measurement of the vacant land. By hiring a surveyor, not only will you get an accurate figure for the land but you can also confirm that the property lines that are listed on the deed are legitimate.
This is really something that a seller should have confirmed before even listing the property. However, you will be surprised by how many measurements were made with outdated methods and technology that have not stood the test of time, which is why you may want to consider hiring a surveyor regardless of whether you are a buyer or seller. The average cost of a surveyor is roughly $500 but this could result in a figure that could potentially greatly affect the value of the vacant land - especially for large vacant lands and properties located in pricey areas.
One of the biggest selling points for many buyers will be the features of the vacant land. In addition to the location, you really want to focus on what the land has to offer by assessing all of the qualities that come with the property.
Since we are dealing with vacant land that has received minimal to zero improvements, you will likely not be able to showcase any development features of the land. Instead, you should assess the natural qualities of the property that would be appealing to most people.
If you are evaluating a vacant plot of land in an urban neighborhood, then you probably will not have too much to consider other than perhaps some basic vegetation at most. However, rural areas often have more space and more dynamic features such as:
With that being said, something you should look for as a buyer and seller of any vacant property is any landscapes or vistas associated with the property. This could include a backdrop of some beautiful mountains, a lake, or a plain. Ultimately, you should be looking for any features that give the property a nice aesthetic. Having any natural qualities or views on a vacant property can result in a major price increase for the land.
You can have the best location in the world for your vacant land with the appearance of having all of the right qualities but if the condition of the property is poor, the value of the land can drop significantly.
There will be some aspects of the vacant land’s condition that you will be able to spot relatively easy on your own. As you assess the property as either the seller or the buyer, you want to look for any defects and poor attributes on the land. Given that the vacant plot will have minimal improvements, you should not have any structures to evaluate, but rather some of the natural qualities of the property.
If you see that the vacant land has a lot of poorly maintained vegetation that is overgrown or has been subject to some form of destruction, then this could lower the price of the property. If you are the seller, you should consider doing some kind of upkeep on your vacant land before you list it on the market. This could include doing some yard work, clearing out some debris, and making the property look presentable.
Some sellers may not want to get their hands dirty with this kind of work - especially if the property is very large. In this case, you may want to hire a professional landscaping company to tend to the condition of the property. This way you can be assured that the land will look its best when you list it on the real estate market. By doing this, you should be able to squeeze a little more value out of your vacant land as the seller.
However, if you happen to be the buyer, in this case, you should look for the same property conditions and use them to your advantage when pricing the land and making an offer. If you have noticed that the seller has not maintained the property’s condition well, then you can take advantage of this by using it as leverage when negotiating the price of the vacant land. You can then either offer the seller less than their asking price due to the state of the property - or you can stick with the asking price under the condition that the land is first maintained.
A very important aspect of any vacant land parcel is its accessibility. If you are evaluating a vacant plot of land in an urban area, then you will most likely find that accessibility is not going to be an issue, as most properties in cities have undergone urban planning that requires them to allow a certain level of access to the general public.
However, vacant lands in rural areas usually have far less regulation and are often not set up for convenient public access. If accessing the vacant land is challenging or even inconvenient, this may greatly affect the value of the property. This is generally the case with undeveloped farmlands and empty lots that have been left untouched. Here are some things that you want to assess when determining the accessibility of vacant lands:
- Road Access - a major selling point will be how easily the vacant land is accessible by road. If there are roads or highways that clearly lead to the property, then the road access should be fairly decent. However, if it is hard to access your land directly by road or if there are no main roads in the area at all, then you will find that the value of the property can drop quite a bit.
- Driveway - If the vacant land has decent road access, then there may be a driveway that leads up to the property. This may well be the case in an urban area, but in a rural environment, it is much rarer. However, having a driveway that leads up to the vacant land may increase its value.
As a buyer, you want to ideally have at least a minimal level of access to the vacant land so that you can easily pursue whatever projects you have in mind for the property. If you are finding that the level of access is challenging or obscure, then you can use this as a bargaining chip when evaluating the property.
As a seller, you may take a hit on the price of your property if it is hard to access, which is why you may want to consider making it easier to get to the parcel. While you will likely not be able to influence any major roadways in your area too easily, you can develop your own driveway or primitive road access so that you can increase the value of the vacant land.
Depending on the interests of the buyer, having utilities connected to the vacant land can be an essential feature of the property. This is going to be especially the case in urban areas, as most buyers will be interested in pursuing a development project for either a residence or a business. If the property is in a city, it should have utilities connected to it.
However, if it happens to not have any utilities connected, then you should consider arranging this with the local utility provider so that you can use it as a selling point for the property while increasing its value. Alternatively, you can leave the property as it is, but you should at the very least confirm with the utility provider whether it is possible to get connected or not.
With that being said, vacant land parcels located in rural areas can be a bit of a toss-up with utility access, as it is quite common for them to not be connected in these places. This will especially be the case with properties that are located in the middle of nowhere that has not been developed, maintained, or improved in any way. Here are some examples of common utility connections that are favorable for increasing the value of land:
Having the option for utility access is always a feature that will increase the value of any vacant land parcel. However, you may find that utility access is not always a necessity for some buyers. The reason for this is that not all buyers that acquire vacant land parcels aim to pursue development projects that require utility connections. If a buyer simply wants the property for real estate investment opportunities such as flipping the land, then they may disregard this factor when valuating the land for themselves.
In addition, vacant properties in rural areas may only need access to the most basic utilities to satisfy a buyer. If the land can have access to at least water and electricity, then this should be enough for some buyers for things like farming. Having these basic utilities connected could greatly increase the value of the vacant land.
A factor that can greatly impact the value of even the most desolate vacant lands is whether the property has any natural resources on it. Natural resources can be extremely profitable if harvested and utilized correctly, as many vacant landowners can pursue business prospects simply from the qualities of their property.
The tricky thing about natural resources is that they are not always so easy to spot. To confirm their existence we usually need to hire some sort of professional to assess the vacant land for a specific resource. The trouble with this is that you first need to determine which professional to hire, which can be tricky if you do not really know where to start.
Some natural resources can easily be spotted with the naked eye and they may even be part of your vacant land’s natural aesthetic. Whereas others are hiding beneath the surface and need to be put under a microscope to confirm. However, discovering these natural resources can greatly increase the value of the land for either a buyer or a seller. Let’s have a closer look at some of the natural resources that can sometimes be found on vacant land parcels.
While the world is currently going through a transition into sustainability, we do still get the large majority of our energy needs met through fossil fuels, which means that this industry is still booming and extremely profitable.
Discovering fossil fuels on U.S. soil can be even more advantageous as it will be valued higher than offshore resources. Here are few examples of fossil fuels to consider:
- Natural Gas
- Nuclear Energy
With that being said, finding out whether your property has fossil fuels on it is easier said than done, as you will not be able to confirm this on your own. To do this, you will need to hire a professional to come to assess your property for potential resource harvesting. A geologist that specializes in fossil fuels will be your best bet for this job, as they will be able to give you a solid analysis of your vacant land. If the geologist’s report shows that there are potential fossil fuels on the property, then the value of the vacant land can increase tremendously.
While assessing the vacant land as either a buyer or a seller, you will likely have determined whether the property has any natural features on it (as mentioned above). If you found that the land does have natural features, you can also interpret some of these as natural resources - depending on their type.
If the vacant land has a substantial amount of natural resources, then this could potentially increase the value of the property. Here are a few examples of valuable natural resources:
- Fertile Soil
If the vacant land parcel is relatively small and has a limited amount of these resources, then the price will probably not be greatly affected. However, if the property is large and has an abundance of these natural resources, then the value of the vacant land may substantially increase. This is especially the case if there is a large forest on the property that can be used for logging or if there is enough fresh water in the form of a lake or river that is capable of supplying a nearby community, town, or even city.
In addition, vacant land parcels that have fertile soil can be a highly attractive natural resource for buyers that want to pursue a farming operation. If the property has soil that is worthy of food production, then this could greatly affect the value of the land. However, this may be a bit challenging for you to determine on your own, which is why you may want to hire some to test the quality of the soil to confirm that it is good enough for farming. Alternatively, you can do this on your own by using a soil test kit, which will also indicate the fertility of the soil.
Something that you always want to be aware of when assessing vacant land parcels as a seller and a buyer is whether the property has any kind of easements in place on it. An easement is essentially a development restriction that has been attached to the property. This generally occurs when the owner (or previous owner), made an agreement with either the government or land trust to relinquish certain rights to their land.
If the vacant land parcel has an easement in place that significantly limits the amount of development that is allowed on the property, then the value of the land can end up dropping significantly. This is especially the case for buyers that want to pursue some kind of a building project or utilize the land in a way that violates the agreement.
With that being said, if the property does have an easement in place it is not always the end of the world and it may not affect the value of the land too much. The value of the land will stay relatively intact so long as the easement is not overly invasive and does not limit the potential for future development. Here are a few examples of easements:
- Public Access - A common easement restriction is when an owner has agreed to allow some form of public access to their land. This is often seen with things such as public access roads that have been built by the government to make transportation more practical - or it could involve allowing some kind of leisure activities on the land to the public.
- Shared Border - The owner may have agreed to share a border or fence with a nearby neighbor or organization. This sort of agreement will usually involve a shared responsibility of upkeep and maintenance of the border.
- Utility Access - We often see utility providers and government organizations involved with easements with vacant lands that allow for some kind of utility access to or through the property. This is usually seen when electrical wires are put up that need to cross someone’s property.
These sorts of easements are usually not overly invasive and will not lower the price of the vacant land parcel too much, but you should always have a good understanding of whatever easement is in place to determine its overall limitations.
However, if the property has a conservation easement in place, then this could greatly affect the value of the land. A conservation easement is an agreement through the government or a land trust organization that limits the kind of development a landowner is allowed to pursue - to help preserve and protect the environment. These easements generally have a lot more limitations and can often prohibit development entirely. These are some development restrictions that are often tied to conservation easements:
- Building Homes
- Building Structures
- Building Fences/Barriers
In addition, you may be limited with how you can use the vacant property for things like farming and resource harvesting. This is almost always done to help protect vital natural habitats, species, or simply to preserve the natural beauty of an area, but it can lower the cost of the land significantly. Some buyers and sellers have reported property values dropping by as much as 50% of normal market value for lands that have strenuous conservation easements in place.
If you are interested in selling or buying vacant land, one thing that you should always keep an eye on is the real estate market. You want to be aware of market trends so that you can understand the direction that land prices are headed. The ideal mentality for this is to buy low and sell high, but this can be quite challenging to predict sometimes.
If you are buying or selling land in a rural area, then you probably do not need to overthink the real estate market too much, as property values in these areas tend to be much more stable and will only increase in value slightly over time. Regardless, you should always check on the real estate trends of your area so that you can try to determine the best potential price that you can get - regardless of whether you are selling or buying land.
With that being said, a vacant plot of land located in an urban area can fluctuate in price much more, which can result in big profits for sellers. The biggest determining factor for this will be the stability of the local economy of the area. If the economy is quite strong and the area of the vacant land parcel is attractive to a lot of buyers, then you can expect market trends to continue to show increases in property values.
However, market trends in these areas can also be greatly affected by competition within the real estate market. Areas that have a lot of attractive qualities often have a lot of demand for properties. You will find that these areas have a lot of desperate buyers that want to acquire property in a specific area - and they are willing to pay for it. This sort of demand greatly drives the price of vacant land parcels and creates a lot of positive signs for price increases within the real estate market.
A key aspect of valuing land in this way as a buyer and seller is to be patient. Timing is everything and if you are willing to observe the market long enough, then you can pursue buying or selling vacant land at an ideal time. If you are selling your vacant land, then ideally you want to wait until the market is at an all-time high so that you can make the most from the property. However, if you are buying land then you should consider what your budget is so that you can buy vacant land when it makes the most sense. Ideally, you will pursue purchasing land as the buyer when property values are stable or dropping.
About THE AUTHOR
We loved family’s outdoor adventures so much we started a land business just to help others buy their own land. We’ve sold to dozens of people from ATV weekend warriors to camping enthusiasts to retired truck drivers. Our inventory spans five western states. We’ve been trained by experience, land acquisition courses, and hundreds of hours meeting with county assessors and clerks, zoning officials, realtors, and land investors. We’ve answered hundreds of questions from people regarding the buying and use of land.Read More About Brittany Melling