Land values are determined by collecting sales within a range of time in a certain locale. Once the sales are collected, comparisons are made between properties with like size, use and services. By making the comparisons one can form an opinion on the worth of the properties in a given area.
Considerations to be made:
- When did the sales occur? Are time adjustments required to form a better opinion of value?
- If properties are selling considerably above or below the median sales range, an inspection of these sales must be completed in order to determine if sales will be excluded.
- Did sales occur in an area that has a new influence that is driving the price higher or lower, in that case a submarket may be required.
- Properties that have access to utility services or have offsite improvements such as sewer, streets and drainage, and are close in proximity to shopping, schools, parks and highways are determined to carry higher values.
Once a study has been performed and the considerations are made, an opinion of value can be determined. The values then can be applied to like properties in the market area.