Land Value Estimation

Always had a challenge in establishing how to exactly value land. Looking at an inner city property, great location, is 5 x 40m in size and has dual street access. There are people living in it, I believe they are house sitting for the owner who is overseas. I think they are relatives.

The house itself is almost a knockdown job, otherwise, substantial re-blocking/re-stumping/re-plastering/re-wiring would be required :eek: You get the picture.

There are no real comparables in the area (ie effectively land value) that I can source, although I see what unrenovated properties of a similar size are going for. Although they are generally double frontage but shorter in length. Again a little different proposition.

I know they will find it difficult to sell, because it will only be suitable for a targetted buyer market. Not many working professionals in the city will want to pursue the work to re-build or rejuvenate. So whilst 5m width is a touch small, 6m+ would be preferable, the price may ultimately be attractive to pursue. There are two options with the land, one to build a contemporary home or alternatively to build two townhouses.

I have council valuation from a rates notice, but I know they are not really relevant. What methodologies have you used to determine what land value is in the absence of any easily accessible and objective price information.

My initial thoughts were to look at finished properties (both options above) and their sale price, and subtract the estimate of what it would cost to build. Any more sophisticated options?
Buzz, are there any land sales in the neighbouring suburbs that may give you a bit more of an idea? Whether they be govt. land sold off and subdivided, or older houses being knocked down and sold off?

Lynn, beware, registered valuers often have no idea. Bought an old house couple weeks ago, and in the report the value they attributed to the land component was a joke. Perhaps if you comission it yourself with specific instructions about the land it may be different?

Thanks for that tidbit of info, - I have never had a valuation done for land alone, so your point about specific instructions is food for thought. Something to file away for future reference. :)

No probs Lynn, bare in mind I'm just going from my experience with valuations done on house and land as well.

Perhaps it is different when you comission them for the specific purpose of 'land.' The valuation I got last month valued the 'land component' of the deal at about 40% below what land has actually been selling for in the area, and attributing way too much (IMO) to a 58yo house on the block.