How to Appraise Land

Appraising land is an involved process that takes into careful account the local economy, its prospects for growth and the property taxes charged for a geographic area. How the land is zoned and how it is being used in neighboring areas is also important to the subjectivity-tinged calculations involved in land appraisal. All resources located on the land, including water, must also be taken into account to get to an accurate price.

Instructions

1. Educate yourself about real estate and business appraisal. Land appraisal is an intensely involved process that requires an understanding of local economy, businesses, land usage, construction, fertility (if applicable), groundwater and pollution. It requires regular data collection and continual monitoring of statistics.

2. Understand that every plot of land is unique. Land always has a set of advantages and disadvantages. The appraiser, if he wants to come up with an accurate number, can't simply treat every plot of land as identical to one next to it, even if it appears quite similar for whatever plotted use it might have. The social and economic context of a plot of land must be understood to price it accurately.

3. Research similar areas of land and how its occupants are performing. Land prices should go up if landowners are meeting their obligations without too much trouble and are continuing to achieve further economic success. They should go down if landowners are having trouble making payments or are being pushed to sell their land in large quantities.

4. Be aware of significant changes in land usage. For example, a rural area may shift from a primarily agricultural area to one that is mostly made up of vacation resorts and second homes. This changes how the land is valued. Fertility becomes less important, for example, while the value of sight lines and low noise levels becomes more valuable.

5. Interview business owners and homeowners about important data, such as commuting time to a major highway and any significant problems, that might have been missed. Community networking can be an invaluable source of data, and an excellent compliment to statistics derived from private and governmental sources.

Resources

• Henry George website for land assessment
• Propex for valuing land