If you can get the parcel number, there are ways for agents to find out what they bought it for through MLS. In some states the sale price is recoded with the deed. You can also get comps through MLS.
I haven’t used it for land, but www.zillow.com gives a good ballpark on properties in its database. You can also look out on www.loopnet.com and www.realtor.com to see if there is anything similar. If your county recorder’s office is automated, you can use the parcel number to pull up the current tax valuation.
Someone wants to sell me 30 acres in Morris, NY (upstate NY) for 160k, but I don’t know if that is a good deal or not. Anyone have any suggestions? Is it the same as finding the comps for a house? Any input from the board would be helpful.
Thanks,
DJ-NYC
I have a friend who used to buy and develop land. He always told me that the land needed to triple in value every 7 years just to break even.
He showed me his facts and figures and they looked right. I only bought land when I could sell or develop it right now and I only used options, never committed any large sum of money upfront.
Land is typically valued at its HIGHEST and BEST use.
That normally means what can you do with it. Developers almost never “Buy land on speculation”…they have a plan in place or get the deal tied up as Joe says and see if the plan will work.
There are so many things to consider in the purchase or raw land that it is almost impossible to do here. Things like…what are the soil conditions? Can you build on it? Is is only good for pasture land? What can you get it zoned to? What would you do with it if you could get it zoned to what you thought was best and tried to sell it to a developer who says you got it zoned to the wrong zoning? Is is to be your dream residence out in the hinterlands?
Suppose you found out you had to zone it into 5 acre single family parcesl. Then you have to figure out what you can do the infastructure for…ie., water, sewere, electric, streets, sidewalks perhaps, etc. then add that to the cost of the land. Now comes the big question of what can you sell it for…if the numbers do not work…you got 30 acres that you cannot make a profit on.
Do you have a developer who might be interested? If so tie it up like Joe said…present it to the developer and let him do the planning.
Land has always been the highest risk and highest reward part of real estate investing. You take a substantial risk with the possibliity of no reward when you get into land…no depreciation, little tax write off…gambling you can zone it and build it out…big big risks…and if you do it correctly big big rewards.
So, figure out what you want to do with it. Find out if what you want to do is feasible and will be financially rewarding. Then you can establish a value.
What are you gonna do with this land ??? - Posted by landology
Posted by landology on March 29, 2006 at 01:08:21:
I am not trying to be rude, but do you know what you are going to do with this land after you buy it? What are your plans for it? Usually someone who has a plan for the land usually has an idea of the value of the land.
There is a lot of empty land in upstate NY. You only buy some if you have specific plans for it, or are betting that a certain thing will happen to increase the value and you have potential buyers in mind…if not its just another piece of land…
Re: How do you find the value of Land? - Posted by Joe Kaiser
Posted by Joe Kaiser on March 28, 2006 at 23:59:55:
He says $160k is a good deal? Fine, I trust whatever seller’s tell me so
I’d immediately go write it up for $160k.
Now it’s time to do your due diligence (yes, after it’s signed up, never
before). You do that with the 180 feasibility study you made sure to
include in your purchase agreement.
The focus of the study is to determine if it’s feasible to sell the
property at a profit. In other words, “due diligence” is code for “find a
buyer.”
Understand . . .
The value of 30 acres is Morris, NY isn’t known unless and until you
have a valid purchase and sale agreement all signed off with your new
buyer. Whatever number you two agree on is what it’s worth.
The deal you made with the original seller is merely a starting point.
You took him at his word that it was a good deal, and if your study
confirms it wasn’t nearly good enough, then you can now reopen
discussions and arrive at a number that does work . . . or you can fold
your tent knowing there’s nothing there for you.
Go write it up. His number is a fine starting point. Understand and get
really clear on this . . . what happens after the deal is signed up is
much more important than what happens before.
In fact, anything happening before is almost always a complete waste
of time.