Estimation of the cost of land

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Modern valuation of the value of a land plot determines the market price of the ownership right to a plot of land or other property rights that are related to the land being valued. Now we will consider this issue in more detail, because financial transactions related to land are considered one of the most complex and have many nuances and pitfalls.

When should land be valued?

Estimation of the value of land is formed when registering a pledge, when buying / selling, contributing to the authorized capital of an enterprise and other purposes that are provided for by law. An appraisal examination is carried out in relation to industrial lands, settlements, as well as agricultural land. An appraisal of the value of a land plot is required when dividing property. If an assessment of the right to lease is needed, then the value of the right to lease a plot of land on the market will be determined as the difference between the market value and the rental capitalized rateto this area. To evaluate a land plot (for a market price), one must take into account its location, transport accessibility, availability of communications, its purpose, as well as the ability to change the latter.

Main reasons for land valuation:

– To comply with a court judgment regarding inheritance rights, resolving property disputes, such as divorce proceedings, etc.

– When lending secured by land. This may be a piece of land purchased for credit money or already owned.

– When conducting a lease or purchase/sale transaction.

– To revise the cadastral value. The purpose of this operation is to reduce the tax base, etc.

Evaluation factors

The difficulty of assessing land lies in the fact that here you need to take into account the following factors:

– permitted use;

– purpose of the snake area;

– volumetric and spatial characteristics (relief, area) and much more.

Modern valuation of land differs from the valuation of an apartment or house, which have only one purpose. Depending on the terrain, the cost of land will be different. In addition, when evaluating the cost of land, you can apply all existing approaches to obtain the final price: profitable, costly and comparative. The most used approach is comparative. However, in certain situations (toFor example, if there is not enough activity in the real estate market in terms of the sale / purchase of land), it is impossible to apply this approach. In this case, the cost is determined by the cost or income approach.

The appraisal of the value of a land plot also depends on the expected duration, size and income potential of the leased land for the period of time when it is used most efficiently.

How much do appraisals cost

Estimation of the cost of land also has its cost. And the latter depends on the purpose of assessing the value of the land plot, its purpose, the scope of work, as well as on the appraiser who conducts this assessment.