Practical Way To Determine How A Residential Lot Is Priced - Valuing Residential Lots

Just as with every other asset, supply and demand will determine what buyers are willing to pay in any given market.

In this real estate graph, the green vertical columns show the one-year trend of the average number of lots selling each month (measured on the left vertical axis), while the brown line shows the one-year trend of the average lot price each month (measured on the right vertical axis).

Currently, the average lot price has risen to $47,000 and Tallahassee has averaged 78 lot sales per month over the past year.

Lots and Land Real Estate Report of the Tallahassee Real Estate Newsletter, shows the relationship between lot sales and new construction sales over time.

Lot Valuation Rule Of Thumb

While this is a rule of thumb that might or might not be practical in every area, I know that it will serve most people well in the Tallahassee real estate market. The only times that it won't be useful is when you are looking at large acreage (meaning the land holds more value than the house built upon it).

The rule of thumb: Land is typically 25% to 33% of the property value.

Let's say you own a lot in a Tallahassee neighborhood where recent home sales have been from $350,000 to $400,000. Applying the rule of thumb, you could conclude that your lot would sell in a range from (25% of $350,000 to 33% of $400,000), meaning a range in value from $87,500 to $132,000.

Then you would look at current market conditions, and in Tallahassee, it is still a buyer's market. That means you should expect to sell your lot nearer the lower end of the range. You would then look at supply and demand for lots in the $80,000 to $100,000 range to see the depth of your competition.

Why The Lot Valuation Rule Of Thumb Works

The majority of lot buyers are likely to finance the construction of their home. When it comes time to put a house on the property, the valuation for the new construction will not appraise if the buyer "over-pays" for the land.

In our scenario above, assuming a new construction price of $150 per square foot, the buyer paying $132,000 for the land could only build a 1,787 square foot home (very small for a $400,000 home), while the buyer who paid $87,500 could build a 2,083 square foot  house (still relatively small for a $400,000 home).

The buyer paying the lower price would end up with 17% more house than the one who paid the top price. Since there are plenty of lots available at this price range, prudent buyers are going to shop for bargains so they can build more house.

Building A House - Start With The Lot

If you are thinking about building a house, it is recommended you start by meeting with a well-trained real estate buyer's agent.

If you are still wanting to build, start by choosing where you want to live and select a lot that will allow you to build the home of your dreams. If you'd like to know more about lots and land in the Naples Real Estate area, you can reach out to your Naples Real Estate Agent.

Source Article:

Other Articles Of Interest:

10 Animals With Incredible Superpowers
Melting Antarctica Could Drown Coasts
Music Videos Shot Live Made In Omaha
Naples Crawfish Boil Hosted At Boys and Girls Club
Photovoltaic Manufacturing Companies Worldwide
How To Search Google By Category
Halo: The Master Chief Collection Fixed!?
Crying Isn't A Bad Thing
Mystery of Dwarf Planet Ceres' white spots deepens
Yellow Fever On The Rise
Solar Sailing Powered by Photons
Why Is Germany Repatriating Gold
Hole Spotted On The Sun Is 10 Times Bigger Than Jupiter
Medical Breakthrough Or Is It Science Fiction
What Does The Future Hold - Predictions
Mountain Size Asteroid On Path With Earth Russian Scientist
Jurassic World: The newest installment to the Jurassic park Franchise

University Articles of Interest:

Excellence in Civil Engineering Education
STEM Scholars Year-End Challenge
FGCU's ASCE Student Chapter has been selected to receive Honorable Mention!

FGCU Students Win "Titanic" Award!
FGCU Engineering Students Participate in Cape Coral Cardboard Regatta Competition - April 18, 2015
FGCU Civil Engineering Students Reveal Redesign for Ponce de Leon Park
NSF ENGINEERS GRANT –Co PI’s Dr. Tanya Kunberger and Dr. R. Christopher Geiger
Lisa A. Zidek is the Associate Dean
Selective Program for Internships
Brief Bio of Richard Behr, Engineering Dean at Florida Gulf Coast University
Allow me to introduce myself - My name is Lynn See

Medical Articles of Interest:

Non Invasive Skin Tightening still 'not quite there'
Loose Dentures?  Think Dental Implants
Zirconium, The New Leader in Dentistry
More research needed to validate Stem Cell use for Cosmetic surgery
Early Detection Key to Surviving Oral Cancer

Real Estate Articles of Interest:

Practical Way To Determine How A Residential Lot Is Priced - Valuing Residential Lots
Buyers Shift Focus to Condominium Market 1st Qtr 2015
Naples Real Estate Area February 2015 Market Report
Naples Real Estate Area January 2015 Market Report
Low Inventory Impacts Market Naples Florida
Real Estate Brokers Business Philosophy
Naples Real Estate November 2014 Market Report
Selling Your Home Clean Repair Purge

Other Videos of Interest:

Naples Botox Doctors
Dentists in Naples
Real Estate Video Production
Real Estate Marketing
Web Designers in Naples Florida
Digital Marketing Agency in Naples
Naples Real Estate
Dental Scrap
Real Estate Listing In Naples Florida 

Other Services of Interest:

Real Estate & Aerial Drone Photography

© Digital
Marketing Agency VuStudios Inc. 2014 - 2015

Post a Comment

  1. Great read guys! Thank you for sharing! Anyway anyone from Singapore here? Interested in property investment? I saw a few property launches that has got huge potential. Anyway keen to know more? Click on the link below!

    Singapore property launch
    property singapore
    condo launch singapore

    Singapore property launch
    property singapore
    condo launch singapore

    Singapore property launch
    property singapore
    condo launch singapore

  2. A winter wooden home will have better protection and thicker, or twofold coated, windows. These houses will in general have huge chimneys or warming appraisal

  3. In contrast to the drafty old wooden homes of days gone by, current private log lodges are worked in light of your solace.see the site

  4. For instance, exceptionally prohibitive drafting guidelines can imply that business space is consistently hard to find in a specific area, downturn regardless. nova

  5. At the point when the economy and business are solid, obviously, you are probably going to see the inverse. Administration organizations need more space, retailers open more stores, wholesalers need more distribution centers. skymarketing

  6. Tajarat strives to be Pakistan's biggest real estate developer ever, guaranteeing the highest international standards, prompt execution, and lifetime customer loyalty. For further detail visit Smart villas

  7. When the business and economy are in good shape you're likely see the opposite. Administration companies require more space, retailers are opening more stores, and wholesalers require additional distribution facilities.overseas employment agencies in pakistan

  8. When the real-estate business on peak Investment opportunities also rise, there is time to Invest and get a high rate of return also know the procedure of Bwc online file verification

  9. Capital Smart City Housing Society is the first smart city which is located in Islamabad. This is one of the fastest and top project in other projects.

  10. This comment has been removed by the author.

  11. This comment has been removed by the author.

  12. This comment has been removed by the author.

  13. Worried about purchasing a domain? Namecheap is the best solution of your problem.