Land Development 101: Key Factors That Affect Property Value

At Perkins Land Development, we often encounter landowners who are curious about what determines the value of their undeveloped property. Understanding these factors is crucial whether you're considering selling your land or simply want to be more informed about your asset. In this post, we'll explore the key elements that influence undeveloped land value and why they matter in the context of land development.

1. Location, Location, Location

It's a real estate cliché for a reason. Location is perhaps the most significant factor affecting land value:

• Proximity to Urban Centers: Land closer to cities or growing suburban areas typically commands higher prices due to increased demand.

• Accessibility: Easy access to major roads or highways can significantly boost value.

• Surrounding Amenities: Nearby schools, shopping centers, or recreational facilities can increase appeal.

• Distance to utilities: Having utilities at the property line with capacity can be a huge benefit to a property. Consequently, if utilities are not available, it may cost 10's of thousands of dollars to run utilities to the property or upgrade existing lines to have the capacity for service.

2. Zoning and Land Use Regulations

Zoning laws play a crucial role in determining what can be built on a piece of land:

• Current Zoning: Whether the land is zoned for residential, commercial, or industrial use greatly affects its value.

• Potential for Rezoning: Land that has the potential to be rezoned for more profitable use can be more valuable.

• Deed Restrictions: These can limit land use and therefore impact value.

3. Physical Characteristics

The natural features of the land itself are important considerations:

• Topography: Flat land is generally easier and less expensive to develop than hilly terrain.

• Soil Quality: This affects construction costs and agricultural potential.

• Natural Resources: Presence of valuable resources like timber or minerals can increase value.

• Environmental Factors: Wetlands, endangered species habitats, or flood zones can restrict development and reduce value.

4. Size and Shape

The dimensions of the property matter:

• Acreage: Larger parcels often command higher total prices but may have a lower per-acre value. Think of this like buying groceries in bulk versus in small quantities.

• Shape: Irregularly shaped lots can be more challenging to develop, potentially reducing value.

• Road Frontage: The amount of road frontage can be restrictive to future development. Typically properties with more road frontage are more desirable.

5. Utilities and Infrastructure

The availability of basic services can significantly impact land value:

• Water and Sewer: Land with access to public water and sewer systems is typically more valuable than property requiring well and septic systems.

• Electricity: Proximity to power lines for easy connection is a plus.

• Internet and Cell Service: In today's connected world, these are increasingly important factors.

6. Market Conditions

The broader real estate market plays a role:

• Supply and Demand: Areas with high demand and low supply of undeveloped land will see higher prices.

• Economic Conditions: The overall health of the local and national economy affects land values.

• Development Trends: Areas experiencing or expected to experience growth tend to have higher land values.

• Surrounding Properties: Neighboring parcels can have positive or negative impacts on your value. You likely wouldn't want your new house to be located next to a 24 hour shipping depot.

7. Legal Issues

Various legal factors can impact land value:

• Easements: Rights of way or other easements can restrict land use and affect value.

• Liens: Outstanding liens against the property can complicate sales and reduce value.

• Ownership Issues: Clear title and full ownership rights are crucial for maintaining value.

• Property Rights: Property Rights can be individually split from a property, the most common is mineral rights. Not having the legal ownership of all rights can drastically reduce the value of a property as it limits the future use.

8. Future Development Potential

The potential for future development is a key consideration:

• Comprehensive Plans: Local government plans for future development can indicate long-term value potential.

• Infrastructure Plans: Upcoming roads or utilities can increase land value.

• Market Projections: Predictions about future demand in the area can influence current values.

9. Environmental Considerations

Environmental factors are increasingly important:

• Contamination: Any existing pollution can significantly decrease land value and require costly cleanup.

• Conservation Value: Some lands may have high value for conservation purposes, attracting a different market of buyers.

• Wetlands: Properties with wetlands can lose useable area and have significant restrictions to use.

10. Historical or Cultural Significance

In some cases, historical or cultural factors can influence value:

• Historical Sites: Presence of historical structures or archaeological sites can either increase value or limit development potential, depending on regulations.

• Cultural Importance: Land with cultural significance to local communities may have special considerations.

Conclusion

As you can see, determining the value of undeveloped land is a complex process involving numerous factors. This complexity is one of the reasons why raw land often sells for less than developed properties – the costs and risks associated with addressing these factors are built into the price.

At Perkins Land Development, we have the expertise to evaluate all these factors and offer fair prices for undeveloped land. We understand the potential challenges and opportunities each property presents, allowing us to see value where others might not.

If you're considering selling your undeveloped land, don't leave money on the table by underestimating its true worth. Contact Perkins Land Development today for a comprehensive evaluation that takes all these factors into account. Let our expertise work for you in understanding and maximizing the value of your property.