"Comparables" For Vacant Land - Follow Up Question

Comments(5)

• 
  NancyChadwick13th April, 2004

  There are different ways to approach this depending on whether:
  1. you're talking about single, individual building lots or larger parcels; and.
  
  2. you're thinking of selling to an end user, a builder, or purchasing it for yourself.
  
  If you post some clarification relating to the above issues, that would help people give you information that's more relevant to your inquiry.

• 
  larrylef13th April, 2004

  Thanks, Nancy,
  
  I'm interested in buying single residential lots in developing areas, some to flip and some to hold for a while.

• 
  the-loanlady13th April, 2004

  Florida where you are listed is table funding state so there are not escrow companies. You can look in the yellow pages for a title company in your area and ask for customer service and then give them the particulars of what you are looking for and your fax number. Title companies will usually provide information to lenders and appraisers for free, but don't really want long winded questions from individuals, therefore write it all down before you call. Other idea are there any real estate appraisers in your phone book? or on line they won't give an appraisal for free but they might source you to someone in your local area www.the-loanlady.com

• 
  NancyChadwick13th April, 2004

  Here's the method I have used in my area of PA to estimate value on individual lots (parcels that have already been subdivided and front on existing streets). I start with what the new home on the lot would realistically sell for ("Total Package SP" and then work backwards.
  
  1. If the target buyer market consists of end users (homeowners), then Total Package SP x 33%;
  
  2. If the target buyer market consists of builders, then Total Package SP x 25% MINUS:
  a. costs for installing well and sewage disposal system or tap-in fees for public water & sewer; and
  
  b. other horizontal improvements (unless there's some extraordinary site condition, these should be minimal since they'd be limited to site prep and permit fees)
  
  I don't just apply rules of thumb blindly, but look at the specific situation and determine if I should tweak or modify. For instance, if the property is in a very hot area and there's a shortage of supply, I would "push the envelope" a bit upwards. Downwards if supply exceeds demand.
  
  One thing I don't do, however, with residential land is price it by the acre. If it takes 5AC to make just 1 building lot, generally speaking, that 5AC lot is not going to be 5X more valuable than a 1AC lot, unless the Total Package SP would be 5X greater.

• 
  larrylef14th April, 2004

  I wanted to thank you both for your suggestions, they are most helpful and I will look into using each one.