Overview of Land Valuation
Land valuation is the process of determining the value of land. There are many factors that go into land valuations including location, size, zoning, age, condition, and amenities. Land valuations are often done using comparable sales data, income approach, market analysis, cost approach, and/or replacement cost.
Land value is the estimated market value of land. A property’s land value is often determined by its highest and best use.
The location of the property is a major factor in land valuation. Location affects the price of a property based on its proximity to public transportation, schools, shopping centers, hospitals, employment opportunities, etc. Properties located near these amenities tend to have higher values than those farther away.
The size of the property is also a big factor in land valuation. Larger parcels of land generally command higher prices than smaller ones. However, the size of the parcel does not necessarily affect the value of the land. In fact, larger parcels may actually have lower values due to their increased costs of maintenance.
Zoning is a legal term that refers to how much land is allowed to be developed in a certain area. Zoning laws vary widely from city to city, state to state, and country to country. Zoning regulations determine what types of structures can be built on a piece of land. These regulations can limit the number of units that can be built per acre, set minimum lot sizes, restrict building heights, and even dictate whether or not a particular type of structure (such as a home) can be built at all.
The age of the property is another major factor in land valuation, especially if the property was built before current zoning laws were put in place. Older buildings are often less expensive than newer ones since they require less upkeep. However, older buildings do not always sell for less money than newer ones. Sometimes, the opposite is true. If the property was built after current zoning laws were put into place, it might be worth more money than a similar property built before current zoning laws went into effect.
The condition of the property is yet another major factor in land valuations. A property’s condition includes things like the exterior appearance of the house, the interior layout, and the quality of the appliances and fixtures. Condition is subjective; some people consider a well-maintained home to be in good condition while others think that a rundown home is still valuable.