When you are ready to sell in Chicago, IL, how do you determine the value of your land?
Use These Three Methods
The traditional real estate appraisal process has three common approaches. The first approach is called the Income approach. The appraiser will look at the market rent for other comparable properties to get a good idea of the potential income that the property is expected to produce. The cost approach is where the appraiser evaluates how much it would cost to rebuild the property exactly how it is from the foundation to the roof. This approach has a lot more variables, such as the current price of building materials and labor. The cost of the actual building is important to consider, but it’s not usually enough to know the market value of the property.
The sales comparison approach is when the appraiser will take a look at the recent sales in the area for comparable properties that have actually sold. This method assumes a buyer will not pay more for a property than other buyers have.
This third approach is the most appropriate to determine the value of your land. Call Blue Ladder Development at 630-387-6861 for more information on these methods!
More Than Recent Sales…
There are a lot more factors than the other sales in the area to determine the value of your land.
How is the property zoned? What can it be used for? If it’s zoned for commercial use at the end of a residential block, that is a completely different value than if the land at the end of the block is also residential.
Does your land have road access? If it’s a residential piece of land and its on a main road, that might decrease the value, but on the other hand, if it’s commercial, that might add more value. What’s around your land? If there is a shopping plaza, a grocery store, some attractions, this is usually a good factor to increase value. What about neighboring properties? If your neighbors have a ton of extra junk lying around their yard, this might decrease the value of your land. Also, take into consideration flood zones. If your land is in an area that is quick to flood, no one will want to build a house on it, which makes your land undesirable. What are the holding costs of the property? You also have to take into account the annual taxes and any association fees.
Another huge factor that determines the value of your land in Chicago is the demand for land like yours? Are there tons of property like it on the market or is this a one-of-a-kind diamond-in-the-rough kind of property? If there are a lot of other properties like it in the market, then you will not be able to ask more than market value, because if they don’t buy yours, they will buy someone else’s land. What are similar properties in the area listed for, and how long have they been on the market? If similar properties have been on the market for a long time, that means there isn’t a large demand for them, and you may have to ask lower than market price to get it sold quickly. If there are not very many properties like yours on the market, especially if it has a special feature, then you may be able to ask more than the average market value for your land; however, that may take a specialty buyer and you might have to wait a little longer to reach the list price. Ultimately, your land is worth what the buyer is willing to pay for it and what you are willing to sell it for.