Property Valuation is very much about comparison. And about knowing why a piece of real estate sold at one value – but the one next door sold for far less. Comparable sales are a solid basis on which to place a value.

But this method doesn’t always work when valuing vacant land.

One of the main reasons is that comparable properties are rare. Urban areas are built up, with the odd subdivision raising its head. And further out of town, large tracts of land are hard to come by. This means that the valuer has a very small pool of properties to base his comparisons on.

Trying to cast a wide net to get more comparable properties creates its own set of problems. Other factors now need to be considered, such as the size of the land relative to the subject property; what zoning it carried; how near is it to an upmarket suburb; or what it was suited for at the time of sale.

Another method relies on the opinions of other valuers – professionals who have experience in this type of property. They may know the area very well. They may also, perhaps, be aware of future developments which would impact the property value.

A third method would focus on cost. For example, let’s say that the vacant land was to be developed into a housing estate. One would then look at the expected income (including the developer’s profit), less the expected outgoings – which equals the most that the developer should pay for the land. This residual is then implied market value. This is a simplistic way of looking at this method – there are still many variables to attach.

There really is no magic formula when performing a property valuation on vacant land. There can never be a 100% correct value. That being said, using a mix of the above methods will give us a reliable number which we can confidently report to our clients.

An accurate property valuation on a vacant tract of land would consider any number of factors. These would include:

  • What is the property zoning?
  • What is the current competition?
  • What are comparative prices in the area?
  • How desirable is this property?
  • What costs are associated with this property?
  • How accessible is it?
  • What is the property size?
  • How close is it to local amenities – or local towns?
  • What do the neighboring properties look like?

We are always told that property is a safe place for your money. But any investment carries a risk. And this is no less true for property. If you want to buy land to develop – or retire on – then give The Property Partnership a call. We can guide you and make sure that your money is being spent wisely.

Call us today on 0860 999 440 or visit www.property-partnership.co.za for all your property valuation requirements.