Whether you're selling or buying land, you'll need a record of comparable land sales, or comps. A comp is the sale of a parcel of land that is similar to the land you are either hoping to buy or sell. If you are buying, comparable sales give you an idea of how much you should pay for a plot of land. If you are selling, they provide a rough guide to help you set the right asking price. Finding comparable sales, though, can prove to be a challenge. After all, vacant plots of land are often unique.
Determine Your Search Parameters
Compile a basic description of the land that you either want to buy or are trying to sell. Does it contain water? Does it have several valuable old trees in its boundaries? Is it near a major city or tourist attraction? All of these features set pieces of land apart. When you are searching for comparable plots, you'll want to find those that have as many of these features in common with your land.
Hire a Real Estate Agent
Hire a real estate agent who has experience selling empty land. This agent will be able to gather comparable sales from the listings of past land sales in the communities surrounding the empty land you want to sell or buy. It's important to work with agents who have sold land in the past; they will consider all of a piece of land's attributes before bringing comparable sales to you. For instance, they won't consider a land sale comparable to your land if the recently sold plot has waterfront access and yours does not.
Search for Online Land Sales
Search online for land sales in your community. This will give you a general idea of the prices that lots are fetching today. This is important: Land values fluctuate as the economy and the local real estate market changes. Just because a piece of land similar to yours grabbed a sky-high offer two years ago, doesn't meant that the market will support the same type of offer today.
Be Willing to Negotiate
If you're selling land, once you set a price, based on comparable land sales, don't be too rigid. If you continually receive offers that are below your asking price, you may have to reduce your asking price. Don't be too rigid, either, when buying land. Just because a comparable plot of land only fetched $50,000 six months ago, doesn't mean that the seller of a similar piece of land will budge too far from a $60,000 asking price.
References
- Real Estate Worldwide: Real Estate Comps
- Land.com: Guide to the Lands of America Comparable Sales Program
- Lincoln Institute of Land Policy. "Assessing the Theory and Practice of Land Value Taxation," Page 2. Accessed June 17, 2020.
- W.J. McCluskey, Owiti A. K'Akumu, and Washington Olima, "Land Value Taxation -- Chapter One: Theoretical Basis of Land Value Taxation," Page 3. Ashgate Publishing, 2005. Accessed June 17, 2020.
- Lincoln Institute of Land Policy. "Land Value Tax Holds Promise for Cash-Strapped Cities and Towns." Accessed Feb. 5, 2020.
- Angus Stevenson and Maurice Waite. "Concise Oxford English Dictionary," Page 18. OUP Oxford, 2011. Accessed June 17, 2020.
- Wisconsin Department of Revenue. "2020 Property Assessment Process Guide for Municipal Officers," Page 33-34. Accessed June 17, 2020.
- Tax Foundation. "Reviewing the Deadweight Loss Effects of High Tax Rates." Accessed Feb. 5, 2020.
Tips
- If you're selling land, once you set a price, based on comparable land sales, don't be too rigid. If you continually receive offers that are below your asking price, you may have to reduce your asking price. Don't be too rigid, either, when buying land. Just because a comparable plot of land only fetched $50,000 six months ago, doesn't mean that the seller of a similar piece of land will budge too far from a $60,000 asking price.
Writer Bio
Don Rafner has been writing professionally since 1992, with work published in "The Washington Post," "Chicago Tribune," "Phoenix Magazine" and several trade magazines. He is also the managing editor of "Midwest Real Estate News." He specializes in writing about mortgage lending, personal finance, business and real-estate topics. He holds a Bachelor of Arts in journalism from the University of Illinois.