As with office leasing, it can turn out quite difficult when it comes time to find out what your land is worth. You may still have the land appraisal from when you purchased your land, however, the value of property and land will change along with the neighbourhood. Whether you want to sell your home or are just curious to find out what the land is worth you can carry out some research or hire a property valuation manager. This will help you to get an idea of what you are looking at getting back on your property with the current market.
There are a variety of methods that are used to work out your current land value. There are even real estate investors who can tell you how much your land is worth right off the top of their head with an accuracy within 5% either way.
Real estate investors have a proven track record for investing in real estate so who are we to judge whether they are actually correct or completely wrong.
There are three valuation methods that are often used to work out the value of the land. Be mindful that when property is purchased, the price will consist of the land and the price of the home with improvements. This will most likely not be listed within the purchase and sales agreement as in practice they only state the final closing price. Adding to that in terms of accounting the property is eligible for depreciation yet the land is not.
Assessed value
There really isn’t a better appraiser for getting the price of your land than the government correct? Appraised land value means the value that the authorities have placed on the property for the main purpose of calculating your property taxes. While assessed value is mostly just an estimate it seems fair to base it on the current market conditions at the time. You need to keep in mind though that the country would have certain knowledge regarding the master plans, zoning, macro data etc. This is what will make their method of valuation more credible beings based on quantity and qualitative information.
Appraised value
Banks have been known to make some mistakes in their business, but they are people who mean business on a serious level when it comes to valuing real estate. The banks make their money via lending our money to borrowers and use property and assets as collateral. This is why they are professionally driven to be as specific as they can when it comes to mortgage valuations.
This is why lenders will always require appraisals to be conducted by properly trained and qualified appraisers. Some lenders will appraise the property internally themselves.
Replacement value
Insurers are quite careful when it comes to financial planning. There is often no way for them to make a loss from their insurance policies. Insurance for real estate is a booming business. There are so many types of policies that specifically cater to homeowners and landlords. When they are calculating the premium that is required for your policy, they are required to calculate the replacement cost of your house. Otherwise, there is no point in underwriting anything really. The replacement cost will refer to how much it will be to replace the house with a new one shall there be an event like a fire that condemns the whole house.
