Wednesday, April 8, 2009

What Dictates Land Prices?

I get this question often from people who have just started looking for a piece of rural property. A prospective buyer will see numerous properties advertised online or in the newspaper, and wonder about the dramatic price differences in various tracts. There are many variables and features that determine the value of land in Alabama. Below are a few that you might consider as you look to purchase property.

1. Road Frontage- Paved road frontage is often desirable if you intend to build a home or cabin. The road makes accessing your property easier, but serious hunters will often shy away from busy thoroughfares to help cut down on noise or poaching.
2. Water Features- Whether it be ponds, creeks, streams, rivers, lakes, or springs almost everyone enjoys spending time around water. Water features can add significant value for recreational or agricultural users. Many of our buyers ask for properties with some water present. Alabama has more opportunities to own land with water features than many of our surrounding states.
3. Timber- Old growth forest, planted pines, natural regeneration, clear cut. All of these forms of timber must be factored in to assertain the overall value of the property. The days of purchasing a property and cutting the timber to pay for it are just about gone. Timber value is often around 25% of the overall land value. Also, (buyers and sellers) please do not say that old growth trees are "virgin forests". There are not many virgin forests left, particularly not in Alabama. If a land agent or realtor uses that term, with rare exceptions, they are not knowledgable about what they are talking about. (Ask any forester.)
4. Proximity to Town- Most rural buyers are looking for something far enough away to be isolated, but close enough to Wal-Mart and restaurants to bring along spouses or other guests.
5. Utilities- Having power or water available close by makes the land attractive to more buyers, which can result in higher values.
6. Access- Deeded access means that the owner has a legal right of ingress and egress. A prescriptive easement means that the owner has permission to cross an adjacent land owner to access his property. Land-locked means that there is no access granted to this property. In most cases you can seek a remedy for access through the courts in Alabama, but a deeded easement is generally the most sought after means of accessing a tract.
7. Surrounding land owners
8. Surveyed?
9. Pasture / Open Land- Many times pasture land is more valuable than timbered tracts. Forestry companies might disagree, but land agents know that open land is generally more valuable than timber. In west Alabama, I have seen pasture land sell for 1.5 times the raw land value. Open land affords more options such as agriculture, horses or livestock, homesites, or CRP programs.
10. Easements- Powerlines, gas pipelines, sewer pipes, or other easements may encumber your property or make it less desirable.
11. Mineral Rights- If these rights are retained, sold, or leased they could affect the property value somewhat.

These are a few considerations that are taken into account when calculating the value of a property. If you have specific land buying or selling questions, please feel free to contact me by visiting my website at Also, check out some of the great properties I have listed in west Alabama.


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