Valuing Your Land

Written by Jenna Ritter

It is not expected that the average land owner understands the following components to properly valuing your land. If you do not choose JENNA RITTER as your land sales specialist, please make sure the agent you hire can explain each of these components and how they relate to your land specifically. If they cannot talk through these components outlined below, they do not know how to sell land.

1) Location: This is the most obvious. Like anything else, if your land is located in a populated or growing area, it is worth more than an area that is declining in population.

• Commercial businesses that will pay the most money will be even more specific to what businesses are already in the immediate vacinity. Many businesses cannot survive if there isn't a major big box store or supermarket already in place, within sight of your land. 

2) Road Frontage: 

• County maintained, state route, private road frontage, or no frontage at all with access through an easement
• Intersection
• Positioning of a center lane or median
• Where on the road frontage is site distance met for a driveway
  • Does site distance allow for a left/right exit, or right out only exit
• Will a deceleration lane be needed
• Is there an entrance already in place

3) State Waters: State waters are any type of water that exits the property; creeks, rivers, ponds, streams, spring heads. Almost everything is a state water.

• Is the state water a trout tream - trout streams have 50ft undisturbed buffers. Non trout have 25ft undisturbed buffers. Local munacipalities might have additional pervious or impervious buffers in place. The buffer is measured from the edge of the wrested vegitation. 
• Location of state waters: The more invasive a state water is on the property, the more unusable space there is.
• Determining if the presence of state waters helps or hurts your value: A pond or creek can help the value of residential or agriculture land. It usually hurts the value of commercial. 

4) Topography and land conditions: Grading is the most expensive part of land development. 

• Commercial projects usually require a large area to be flattened. Developers will evaluate how steep a slope or incline is, how much dirt they need to bring in or take out, how many walls they will need and how tall OR evaluate if they can slope the land, and how many detention ponds the land will require if any. 
• Residential land is more valuable the more that the land is usable. A few flat usable acers is usually more valuable to a homeowner vs. a lot of acreage that is unusable. 
• Land that has had any clearing or grading done is more valuable that vacant wooded land.

5) Soils:

• Residential - soils must be suitable to support a septic tank if there is no sewer. Residential land is basically worthless without a septic tank or sewer. 
• Commercial - If there is a high concentration of rock, developmental costs will be higher, thus impacting the value of the land.
• Flood zones - You cannot put a septic tank in a flood zone. If sewer is available, the structure must be built at a certain elevation. 

6) Size & Shape:

• Usually the larger the land is, the less value per acre. The higher the overall price, the less pool of buyers, even though you can get more for your money.
• Conservation tax exemption requires at least 10 acres (varies by county). This is a valuable avantage for residential and agricultural uses.
• Basic shapes of land helps values because they are more usable. Land that is exceptionally slender or has "nooks and crannies" everywhere can be limited on use because it may not be able to be properly graded to build a structure, underground utilities may not be able to fit, and the county has setback requirements off of the property lines.

7) Utilities:

• Access to sewer and water dramatically increaes value
  • Additional factors can further increase values:
    • Number and locations of water and sewer taps
    • Do any pipes need to be extended, will the county pay for it or split the cost
    • Are the taps on the same side of the road, or will the developer have to bore under
• Commercial properties values are more heavily impacted by the presence or lack of presence of utilities. Many commercial projects are not feasable without sewer at a minimum.
• Residential property without utilities will need to budget at least an additional $50,000 to install a septic tank and drill a well. Many properties have a septic tank and/or well present from a previous use, which increases the value.

8) Easements/Deed Restrictions:

• Powerlines - No structure can be built under a powerline, or within usually 10 feet of both sides.
  • Size of poles - You can have the power company move the poles, however, the developer will usually have to split the cost, which can still be $10k-$15k per pole, depending the size.
  • For a residential lot, many buyers will not live near power lines, which decrease your value.
• Conservation - This is a 10 year tax exemption covenant. There are very strict rules that essentially keep a developer from being able to disturb the land in any fashion. The agreement can be terminated early, however, the developer will have to pay double the taxes dating all the way back to when the covenant was put into place. It won't affect the value of agricultural land or a small residential estate lot, but it majorly impacts the value of commercial land or residential subdivision land.
• Driveways - It is common for both residences and businesses to share driveways, thus someone else has the right to use your property. Whether or not this negatively impacts value is highly dependent on the layout of the particular property.
  • A lot of residential driveway that cross over onto other properties are not deeded. This is a very grey area. 
• Utilities - If utilities run onto your property, there will be an easement in place allowing those companies to enter the property to maintain the utility.
• Mineral rights - It's possible for someone to own the mineral rights of your land. This means that person can dig on your land for rocks, gold, etc. This significantly devalues land.
• Deed restrictions - Any past owner of a property can write in any deed restrictions they want, and those deed restrictions follow the property. If the current owner violates those restrictions, they could be sued by a previous owner, as well as neighboring properties. Common deed restrictions are those that prevent further subdividing, prohibiting mobile homes, minimim size or architectural requirements, or undisturbed buffers. Anytime any restriction is put on a property, it shrinks the buying pool, which hurts the value.

9) Traffic Count: The department of Transportation tracks the car count per day on state routes. The higher the car count, the more valuable the land.

10) Local Regulations: What is allowed in one county or city, has nothing to do with what is allowed in another, even if it's adjacent. What has been allowed in the past in a given county, has nothing to do with what is allowed now. Some counties and cities make decisions at the planning commission level, some make decisions at the commissioner or city council level. Not only do you need to understand land, you need to understand the regulations in the specific area you are in, and how to navigate if a variance or rezoning is needed.

11) Usability: 

• Understand what your land is zoned for, and what is allowable within that particular zoning
• Understand the highest and best use. Even though a piece of land might be zoned commercial, would a shopping center go there? Would a warehouse go there? Would apartments go there? Would a hotel go there? Would a "mom an pop" or a big commercial name go there? A professional will need to evaluate everything on this page to advise you on the highest and best use. This is how the value will be determined and how the property will be marketed.
• If zoned residential - how many houses can be built based on the zoning, topography and utilities available? Home builders have to be able to make money, whether or not they can get 10 houses, or 100 houses on a piece of property makes a big difference on what they would be willing to pay.