When it comes to investing in raw land, an appraisal is a crucial component. The purpose of this process is to determine the value of the land, identify its best potential use, and sell it to a willing investor for the correct market price.
Navigating this type of investment can be tricky, so if you’re planning on buying a plot of land, here’s everything you should know about getting it accurately appraised.
Appraisal vs valuation
While these terms are sometimes used interchangeably, they do have their own distinct meanings.
An appraisal is when a professional assesses the land in-person and recommends a marketing price based on their findings. Therefore, if you book a valuation through an estate agent, what you’re actually booking is a market appraisal.
A valuation must be carried out by a qualified RICS property surveyor, and is usually required for legal purposes. For example, a valuation would be necessary when the asset is being split due to a divorce, or when settling an estate.
It is worth noting that ‘valuation’ is a more widely recognised term, and this is why most estate agents will use it as a shorthand for their market appraisal services.
Who conducts a land appraisal?
A licensed appraiser will produce a report which helps to set the maximum price a land owner can make by selling the land. If you’re buying land through a loan from a mortgage lender, a land appraisal will ensure that you’re not paying over the true market value.
Related: Why you need a property survey
What is considered in a land appraisal?
When conducting a land appraisal, there are multiple factors for the appraiser to consider, these aspects include:
Land usage
The intended usage of the land is a critical factor to consider. Whether it’s residential, commercial or agricultural, zoning regulations must be taken into account, as well as potential for development or specific use.
Size and shape of the land
The size and shape of land are significant as they affect its overall utility and potential for development. For example, a larger parcel of land may have more potential for development, while an irregularly shaped plot may pose some challenges for construction or efficient use of the land.
Accessibility and layout
The plot’s accessibility to roads, highways and public transportation will impact its market value due to added convenience. The same applies to proximity to amenities like schools, hospitals and shopping centres.
The layout of the land is also a crucial consideration for appraisers. They will assess features such as ease of access and topography, as this will impact the land’s attractiveness to potential buyers or developers.
Current utilities
Essential utilities such as water, electricity, gas, and sewage infrastructure are essential. The cost and feasibility of connecting the land to these utilities dictate whether the land has development potential.
Condition of the land
The appraisal will assess the quality of the land, including any existing structures, vegetation, soil quality, and potential environmental issues. Brownfield sites may require remediation, impacting their development potential and value.
Wildlife
The presence of wildlife and biodiversity will need to be assessed, especially in any ecologically sensitive areas. Preservation of habitats and compliance with environmental regulations may pose restrictions in certain areas.
Assessing the environment
Environmental factors play a huge role in development potential. This includes flood risk, contamination from previous land uses, air and noise pollution, and adherence to conservation regulations. Environmental factors may also be assessed to address and minimise potential adverse effects.
How much does a land appraisal cost?
The cost of a land appraisal varies widely depending on the zoning, location, the size of the plot, and the complexity of the appraisal. You might expect to pay anywhere between £500 to £2,000 for a basic land appraisal, but for larger and more complex plots of land, the cost can be significantly higher.
It’s important to contact a few different appraisers for quotes and ensure that their services suit your specific needs.
Why should you consider selling your land?
Land is a highly valuable commodity, especially if it has potential for development. There are numerous benefits to selling the land that you own to a developer or a residential buyer. The most obvious being that demand for land in the UK is reliably high, especially in well-connected locations. Because of this, you’ll most likely be able to fetch a high price for your plot of land should you choose to sell it.
Are you looking to sell or buy land?
At CJ Hole, we offer expert advice to assist you in making informed decisions. Whether you’re searching for your dream home, expanding your property portfolio, or considering a buy-to-let investment, our close relationships with developers across the South West ensure access to a wide range of opportunities. Let CJ Hole guide you with tailored advice to achieve your property goals.
