how do you comp raw land?

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squirm
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how do you comp raw land?

Post by squirm » Tue Dec 06, 2016 4:00 pm

There's ten acres next to me that I'm considering purchasing. Half of it is densly wooded, highly sloped and has never been touched. The other half, adjacent to the road is more subtle, and open.
Honestly I think the agent is wag'ing on the price. The are very few similar comps.

I figure if I want to build, 80k for permits, $20k for well. There's power poles on the road. No sewer, so septic $20k.

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JDCarpenter
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Re: how do you comp raw land?

Post by JDCarpenter » Tue Dec 06, 2016 5:48 pm

We have 25 acres, with one house, so somewhat analogous.

If I were to put it on the market, I'd want a recent appraisal in hand.

Same would apply if I were buying. Granted, an appraisal is limited to the information available (latest appraisal of our house/land was "650K to 900K, 'depending""), but still the best way to get a handle on it.
Last edited by JDCarpenter on Tue Dec 06, 2016 6:08 pm, edited 1 time in total.
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itstoomuch
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Re: how do you comp raw land?

Post by itstoomuch » Tue Dec 06, 2016 5:58 pm

squirm wrote:There's ten acres next to me that I'm considering purchasing. Half of it is densly wooded, highly sloped and has never been touched. The other half, adjacent to the road is more subtle, and open.
Honestly I think the agent is wag'ing on the price. The are very few similar comps.

I figure if I want to build, 80k for permits, $20k for well. There's power poles on the road. No sewer, so septic $20k.
I hope its my property that you are looking at.
Currently, for net worth purposes, I value it as $0. However for investment purposes, you couldn't afford what we want. Make us an offer, let's see if together can come up with a number that is between $0 and $∞.
Rev012718; 4 Incm stream buckets: SS+pension; dfr'd GLWB VA & FI anntys, by time & $$ laddered; Discretionary; Rentals. LTCi. Own, not asset. Tax TBT%. Early SS. FundRatio (FR) >1.1 67/70yo

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dm200
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Re: how do you comp raw land?

Post by dm200 » Tue Dec 06, 2016 6:09 pm

squirm wrote:There's ten acres next to me that I'm considering purchasing. Half of it is densly wooded, highly sloped and has never been touched. The other half, adjacent to the road is more subtle, and open.
Honestly I think the agent is wag'ing on the price. The are very few similar comps.
I figure if I want to build, 80k for permits, $20k for well. There's power poles on the road. No sewer, so septic $20k.
BEFORE even making an offer, make 100% sure that any building site where you might situate a house can support a septic system AND a suitable well can be drilled.

Gropes & Ray
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Re: how do you comp raw land?

Post by Gropes & Ray » Tue Dec 06, 2016 6:11 pm

Comps are the best way. If it were tillable land you could value it based on rental rates, but that won't work for wooded land. The other way is to determine what a house on a 10 acre lot is worth then back out the costs to build the improvements, but this is a rarely used method because houses rarely sell for the cost of construction plus the cost of land.

Is "80k for permits" a typo?

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Slick8503
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Re: how do you comp raw land?

Post by Slick8503 » Tue Dec 06, 2016 8:56 pm

Where is the land located? Need much more information. Marketable timber? In my area depending on location, agriculture/timber or housing could be the main drivers of value. Also, how highly sloped is the timber ground? Would it make logging it cost prohibitive and or impossible? Perhaps that is the reason it has never been touched. In that case recreation may be the driver of value on that portion. In my area people are starting to pay decent money for hunting leases.

squirm
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Re: how do you comp raw land?

Post by squirm » Wed Dec 07, 2016 11:15 am

dm200 wrote:
squirm wrote:There's ten acres next to me that I'm considering purchasing. Half of it is densly wooded, highly sloped and has never been touched. The other half, adjacent to the road is more subtle, and open.
Honestly I think the agent is wag'ing on the price. The are very few similar comps.
I figure if I want to build, 80k for permits, $20k for well. There's power poles on the road. No sewer, so septic $20k.
BEFORE even making an offer, make 100% sure that any building site where you might situate a house can support a septic system AND a suitable well can be drilled.
Yes, I'm going to get a perc test. Well shouldn't be a problem. Everyone there has a we'll, my well is just 500 feet away.

squirm
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Re: how do you comp raw land?

Post by squirm » Wed Dec 07, 2016 11:16 am

Gropes & Ray wrote:Comps are the best way. If it were tillable land you could value it based on rental rates, but that won't work for wooded land. The other way is to determine what a house on a 10 acre lot is worth then back out the costs to build the improvements, but this is a rarely used method because houses rarely sell for the cost of construction plus the cost of land.

Is "80k for permits" a typo?
Yes, I plan on working it backwards.

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Re: how do you comp raw land?

Post by Gropes & Ray » Wed Dec 07, 2016 11:26 am

squirm wrote:Yes, I plan on working it backwards.
Ok. That is an acceptable method. One of the appraisers I worked with recently used it on a project. Just keep in mind that with residential properties, the cost of buying a lot and building a house is almost always more than the house is worth once it's built, especially in areas that are already developed and you're buying the last remaining lots. Estimate low on the construction costs and be prepared to adjust. Looking at comps in similar areas can help you know if you're in the ballpark. For example, if you back out construction costs and come to a cost of $5,000 per acre, but you know there is a similar rural area in the state where costs are $10,000 per acre (even if it is 200 miles away), that is a hint that your value may be off.

Also, keep in mind that all appraisal is BS to a certain extent, because every property is really only worth what a willing buyer and seller agree upon.

itstoomuch
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Re: how do you comp raw land?

Post by itstoomuch » Wed Dec 07, 2016 1:29 pm

@OP:
We also have 15Ac* within the UrbanGrowthBoundary but outside of city limits, 1 block from new HS. Realtor had to go 15 miles out to find comp land. He stated that the last nearby land with similar characteristics was done some 30 years ago, and happened to be the property next to ours. I told him that I am well aware of that because the public entity who bought this neighboring property land asked us "if the value of our land was true?" .

*

Ask owner. Make an offer and see what happens.
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jfn111
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Re: how do you comp raw land?

Post by jfn111 » Wed Dec 07, 2016 1:43 pm

Finding comps for raw land can be a pain in the butt. If the land is not subdividable then you have to be careful not to comp it against a developer purchase, of similar acreage, where they got 5 lots to build on.

MikeZ
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Re: how do you comp raw land?

Post by MikeZ » Thu Dec 08, 2016 9:54 am

What due diligence have you done to make sure you can build on the land?

squirm
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Re: how do you comp raw land?

Post by squirm » Thu Dec 08, 2016 10:54 am

MikeZ wrote:What due diligence have you done to make sure you can build on the land?
I've asked the county planning. It's dividable too.

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Re: how do you comp raw land?

Post by MikeZ » Thu Dec 08, 2016 1:14 pm

Okay.

So from a zoning prespective you know you can build on the lot what you want?

Do you know if a perc test has been done?

For what I've researched most of the value of the land is set by the useability of the land. So if from an engineering prespective the land does not require a lot of earth moving, the soil will support a septic tank, there are utilities that can be brought in cheaply, zoning requirements, etc all play a very large factor in the market value of the property. The land could look good, but suddenly drilling a well on the site might be a $25,000 proposition.

squirm
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Re: how do you comp raw land?

Post by squirm » Thu Dec 08, 2016 1:26 pm

I'm going to inquire a perc test, I don't think it costs much. Everyone there is on septic, so I don't expect problems.
About five acres is unusable, it's steep and rough terrain, the other five is good.

Here's an issue. The neighbor has some animal pins (4h) located on the land next to his with animals. I know the neighbor somewhat, but not very well at all.

Not sure if I should make an issue out of it or not. If things work out, eventually I'll probably get cows on the lot for my kids 4h too. So how do I go about this potentially sensitive subject? The amount of space he's using is about a quarter an acre, I think.

Gropes & Ray
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Re: how do you comp raw land?

Post by Gropes & Ray » Thu Dec 08, 2016 2:45 pm

Someone else occupying the property is a title issue. The risk is that a long enough occupation actually makes that piece of the property theirs under Adverse Possession. Options to protect yourself may include: give them a written lease/license to keep their pens there; evict them (nicely if possible).

I think most neighbors would understand if you said "Hey, your pen is technically on my property but that is ok if you just sign this letter that says you aren't claiming my property by adverse possession and will remove them if I ever ask you to." If you sign and notarize it, you could probably even record it.

EDIT: I should add that you need to do more research on Adverse Possession in your state. I can't give you legal advice, etc.

squirm
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Re: how do you comp raw land?

Post by squirm » Thu Dec 08, 2016 3:32 pm

Yes, thank you, it's in Ca, I'm worried about prescriptive easement.

Gooseadoose
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Re: how do you comp raw land?

Post by Gooseadoose » Thu Dec 08, 2016 8:38 pm

We bought 10 acres 30 min north of town a few years ago with the same plans to build soon. The only way to figure out comp is look at a ton of other pieces. In our lcol area the price was determined by size and distance from city with a real economy. 1 hr from town and ot many people could like there while working in city, 30 min from town almost double price per acre because you could still drive in everyday. 10 acres there are alot of buyers, 30 acres less buyers, 300 acres waaaay less buyers. Just buy it and spend the first weekend cooking over a fire, listening to lee greenwood and turnpike troubadours while shooting guns and laying on the ground making dirt angles. youll soon forget about the price paid

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Re: how do you comp raw land?

Post by Gropes & Ray » Fri Dec 09, 2016 10:29 am

squirm wrote:Yes, thank you, it's in Ca, I'm worried about prescriptive easement.
My layman-quality (Google) research suggests you are justified in being concerned about a prescriptive easement. This is one area where, if the occupied are would frustrate your plans should it turn out to be an easement, I would definitely consult an attorney. You could also make the current owner aware that the neighbor is affecting the marketability of their title, and hope they will deal with it.

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