Don't Overpay For Land: 5 Tips To Help

I recently observed two land purchases. The two parcels of land were virtually identical. Both were 10 acres of vacant land adjacent to one another. The first parcel sold for $5,000.00; the second for $47,000.00. Almost 10 times more!

What was the difference? The first buyer paid a fair price after doing his research, the second buyer paid ten times what the property was actually worth because he didn't.

Every piece of land is different and prices vary in different areas. It is impossible to say exactly what a piece of land is worth at any given moment. The best definition is "its worth whatever someone is willing to pay". However, the following tips will give you an idea of what specific types of land in a specific area are worth.

These 5 tips explain methods to discover approximate value of a parcel of land. Following these methods you won't pay 10 times what it's worth. When you purchase you can know you paid a fair price.

1. Look at Recorded Deed
In most states the seller is required to include the sales price on the deed. The deed transfers the property to the buyer when recorded at the local recorder of deeds. This is usually a County Recorder.

Once recorded these deeds are public record. You can go to the county and see what a parcel of land sold for. Remember values vary depending on the economy and other factors. If the property sold some time ago the value could have changed.

2. Look at County Assessed Value
Counties assess properties (determine property value) for taxation purposes. Property taxes are based on the property's market value. This is also public information and can give you an estimate of the property value.

Keep in mind that county assessed values often lag actual market value by several years so assessed values won't be exactly the same as market value.

3. Ask a Realtor
An experienced realtor knows the property values in his area better than anyone. If you are working with a realtor make sure you are shown multiple properties. Remember the realtor may be working for the seller and has an obligation to get the highest price possible.

You can also ask a real estate broker to give you an estimate of value for a fee. This is often called a BPO (Broker's Price Opinion).

4. Use Realtor.com, Zillow.com and Trulia.com
Realtor.com, Zillow.com and Trulia.com are three of the most popular websites of property for sale. Asking prices are listed so you can research properties in your chosen area.

Remember this is the price the seller is asking for the property, not necessarily the sales price. Most sellers assume they will lower the price in negotiating the sale.

5. Realtor Company Websites
Similar to the tip above, is the real estate company's website. The real estate company's website may list the properties they have for sale and usually have more details and pictures than the sites above.

Property appraisal is not an exact science. Even two appraisers will not come up with the exact same value for a parcel of land.The above tips will give you an idea of its value, and help you avoid paying many times what it's worth.

By: Deron Wilkerson

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Deron Wilkerson is a licensed Title and Escrow Office in Utah. He has owned and operated a title company since 1991, handling over 15,000 land transactions. Visit Deron Wilkerson at www.LandProfessor.com for more information, tips and help on buying land. Subscribe to the LandProfessor Newsletter at www.LandProfessor.com/newsletter, filled with more information for land buyers.