Land Values

Mortgage and Lending with Cranbrook Loans NMLS #134090

A modular builder I know made a posting on Facebook about being asked "What's your cost per square foot?". There are just so many variables in this question, the answer is pretty useless. Does it include land costs? Site development? How large is the kitchen? 

I have a similar pet peeve, the cost per acre answer when I ask about lot value. Many times potential home builders come to me with land they already own. Often these parcels contain several acres. I'll ask what they feel the value of the lot is and I get something like, "Land is going for about $20,000 an acre, I have 5 acres, so $100,000". Nope, doesn't work that way. That's a great answer if you are going to farm the land, but not a good answer if you are going to build on it.

There is one value for having a buildable lot and a different (lower) value for any additional land beyond that. The buildable value for a one acre lot maybe $20,000 and if you have 5 separate buildable acres, you have $100,000 of land value. But if you have one 5 acre lot with 100 feet of frontage that runs back over 2000 feet, most of which is swamp and trees, you only have a $20,000 lot.

The best way to value your lot is to take into consideration the usable land, the road frontage and the cost of clearing and grading the lot. Then look for similar land sales. Better yet, call a Realtor that specializes in the sale of land.


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