Land is a valuable asset that can help you earn a considerable amount of money if you’re going to invest in it. Plots of land should appreciate over time, and they can often provide you with higher returns on investment over the long-term, especially if the property is in an area with an increase in development.
Land value depends on many factors. Although two plots of land may seem identical, they may be valued differently based on a single or a couple of features. Therefore, you need to know what sets your property apart from others as this will help you determine its value.
Being aware of the current value of your land is essential to protect your investment. For that purpose, here’s a list of factors that determine the value of your property.
Real Estate Market Conditions
Studying the market conditions will help you figure out if your land is low or high in value. Trends in the real estate market can either cause the value of your property to go up or down. For instance, if market demand surpasses supply, prices will likely spike because of the competition to purchase a property.
The attractiveness of a particular local market can also impact land value. If the demand for listed properties in a local area goes beyond the asking price, you can expect land values to rise.
Overall economic performance of a city or state can also be a huge factor that will determine the value of your land.
For instance, if you’re living in a city where the economy is growing, employment and purchasing power will also increase. It means that there will be more people who can afford to buy land, causing values to rise.
Location is an obvious determinant that pulls down or drives up the value of your land. For residential property, it’s high-value if it’s close to schools, hospitals, shops, restaurants, parks, transport linkages, etc. Low crime rates and high employment opportunities are also factors that impact the worth of a residential property.
For agricultural land, on the other hand, there should be a well-developed farm-to-market road and farm facilities to make the property more valuable.
Condition of the Property
Land value also depends on the topography, quality of the soil, presence of groundwater, and climate. For example, a plot of land with a rocky terrain is a major turn-off for people who want to use it for building structures. Fertile land, on the other hand, is ideal for agricultural purposes and will be higher in value because one can plant crops in it for profits.
The condition and aesthetic appeal of a property are important factors to determine its value. You should keep them in mind as they are indispensable when you’re buying or selling land.
City or state authorities may impose restrictions on the use of land in a particular area of their jurisdiction. The type of development in the area will determine the value of properties in it. For instance, two properties will differ in value if one is developed for residential use, and the other is for commercial purposes.
Typically, commercial or industrial lands are higher in value than residential properties. It’s because commercial or industrial properties have more rate of return as time goes by.
Comps Currently for Sale
Comparable properties that are presently for sale can contribute to the value of your land. Of course, buyers will analyze the prices in the market for the best buy. Pricing your property right can make the difference in making a sale. Properties priced too high will detract many potential buyers when there are lower-priced properties with similar features on the market.
You should make sure that the price of your property is not higher than its market value so that you’ll attract more potential buyers.
Comps That are Recently Sold
The same with comparable properties currently on sale, comps that have recently sold can also determine the value of your land. Most of the time, people who are looking to buy a property will look at properties sold three to six months ago. The prices of those sold properties can more or less affect the value of your property.
Knowing the value of your property can help you protect your investment. The factors mentioned above serve as essential information for that purpose. However, aside from determining the value of the property yourself, it’s also necessary to hire an expert that will appraise it to make sure of its valuation.