If you want to finance a land purchase or use land you already own as collateral, you’ll need to find a lender. Before they agree to the loan, they will require that an appraiser determines the value of the land. Below the different factors that are used to determine the value of the property are discussed in more detail. 

How Does an Appraiser Measure Land Value?

Comparison Value

Comparison value is a popular method for appraising both homes and land. It involves looking at the local market to see how much similar plots of land in similar areas have sold for within a recent time frame.

Residual Value 

An appraiser uses various techniques to evaluate land from different perspectives, so your intended use may play a role in determining its financial worth. For example, residual value involves analyzing the intended purpose of the land and estimating its value once it has been fully developed. 

Lot Details 

Another method is to use a survey to examine the characteristics of the plot of land. Looking at its size, easements, condition of the soil, and other factors will help establish its value.

What Features Contribute to Land Value? 

Topography 

The type of land within the property lines will determine how it can be used. For instance, a swampy property wouldn’t be ideal for building a structure. The quality of the land will be compared to its intended use.

Amenities 

The value of the land may be improved by the amenities it offers. These may include a pond or lake on the property or a waterfront view. As long as these amenities don’t interfere with the intended use of the property, they may increase its value.

Location

You likely already know that location plays a part in any real estate appraisal. However, this is also true in appraising the value of vacant plots of land. The location of the land will affect its value when taking the intended use into consideration. For instance, a rural plot of land wouldn’t be the best place to build a new commercial business, but it might be ideal for starting a farm.

Land development is an exciting venture that often relies on the services of an experienced appraiser. After years of serving the Superior, CO, area, Brooks Valuation has earned a reputation for reliability and accuracy, which lenders, investors, and others have come to rely upon. To learn more about their services, you can browse their website. If you’re ready to request a quote, call them at (303) 456-8922.