Evaluating The Price of The Property

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The Bureau of Census took a special survey in 1971 to determine where the average person prefers to have his primary residence. The results are shown below:

By 1973, there were already over 3 million second or "vacation" homes, with the number increasing by 200,000 each year. In 1972, 15 percent of the total housing construction was for vacation homes, with a total of $8 billion being invested that year. All indications are that the rate of interested land buyers will continue to increase at a faster rate than land will become available and prices will continue to rise at varying rates in all parts of the country.

A LIST OF VALUE FACTORS Many elements must be considered in deciding whether the price of a piece of property is "worth it." A general list of the basic factors includes the following: - Supply.

-Demand. -Usability, e.g., level land is more valuable.
-State of the title, e.g., what "clouds," or defects, exist?
-Location, e.g., neighbors, schools, shopping, public transportation, church, recreational facilities.
-Directional growth of the area, e.g., industrial, commercial, recreational, or residential.
-Population and economic growth in the area.
-Aesthetics, e.g., nice view, landscaping, beautiful house.
-Road frontage.
-Accessibility to the property, e.g., condition of the roads.
-Water: quality and quantity.
-Soil and drainage, e.g., for agricultural and building purposes.
-Orchards and garden, e.g, have they been well cared for?
-Amount of timber and type of vegetation.
-Availability of utilities.
-Zoning and building codes.
-Public Health measures and regulations.
-Condition and age of the house and other structures.
-Size of the parcel, e.g., the larger the parcel, the smaller the price per acre.
-Any stigma attached to the property.
-Personal property included in the sale.
-Climate.
-Exposure of the land, e.g., north slope versus south slope. -Timing of the sale, e.g., the owner must sell quickly because he is being transferred to a different location in his job. Each of these elements has its own effect on the value of a parcel of land. For example, the closer property is to a populated area, the more desirable and expensive it will be. If it is close to employment, if it is accessible by a paved road, if utilities are supplied, if a house and other improvements are on the land, it will be more expensive than land without these features.

POTENTIAL USE

One of the main determinants of value is the land's potential for development, meaning that it is valuable not for its own qualities but as a possible site for future activities of a profitable nature. Thus, if large numbers of people are moving into the area and the land is level or nearly so, more intensive use of the land may be expected and this potential increases the value of the land considerably. This is because level land can be subdivided into more usable parcels than steep land. The real estate agent will always play up the land's suitability for subdivision to lure you with the thought of future profits and thus make the present asking price seem more reasonable. If large timber is standing on the land, the price will be higher because you can cut and sell the trees. It is irrelevant whether you actually want to do so. The fact is that the potential is there. When you evaluate land, look at the potential uses for it and how soon the property will be in demand for such uses. How close is the nearest subdivision and how well is it selling? Are any large industries planned nearby that might foretell a growing population? These things indicate the extent of the land's potential in determining its price.

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