🌎 What Is Land Value in Real Estate?

Land value is the portion of a property’s overall value attributed to the land itself — excluding any buildings or improvements. It reflects the land’s location, potential uses, zoning, and market demand.

How Land Value Works

Land value is determined by what the land is worth *as a standalone asset* based on its highest and best use, zoning laws, location, and market trends. Appraisers and assessors evaluate both the raw land and any external factors that influence demand.

Factors that influence land value include:

  • Location — Proximity to cities, schools, jobs, and amenities
  • Lot size & shape — Usable area and development potential
  • Zoning — What can legally be built on the land
  • Utilities & road access — Water, sewer, electricity, infrastructure
  • Market demand — Buyer interest in that region
  • Environmental restrictions — Flood zones, wetlands, soil issues

Land value does NOT include buildings. To determine the full property value, appraisers calculate the improvement value and add it to the land value.

Why Land Value Matters

For Buyers:

  • Helps determine whether the asking price is reasonable
  • Affects long-term appreciation potential
  • Influences property taxes
  • Reveals redevelopment or investment opportunities

For Sellers:

  • Supports accurate pricing and market positioning
  • Clarifies what portion of the property is most valuable
  • Affects investor and developer interest

For Appraisers:

  • Used in determining highest and best use
  • Foundational for cost approach valuations
  • Helps allocate value between land and improvements

Example of Land Value

A home is valued at $500,000. An appraiser determines the land alone is worth $220,000 based on comparable sales and zoning potential.

That means the remaining $280,000 represents the value of the improvements (house, garage, landscaping, etc.).

If zoning changes later allow multifamily construction, the land value could increase even if the house stays the same.

Why Land Value Matters for FSBO Sellers

Understanding land value helps FSBO sellers price their property more accurately and avoid undervaluing redevelopment potential.

  • Ensures listing price reflects true market potential
  • Improves negotiation position with investors or developers
  • Helps explain value differences between similar homes
  • Supports professional-looking MLS listings

Listing through Flat Fee MLS gives FSBO sellers maximum exposure and stronger pricing control.

Frequently Asked Questions

Does land always appreciate?
Often yes, but not always. Economic shifts, zoning changes, and environmental issues can decrease land value.

Is land value included in an appraisal?
Yes. Appraisers separate land value from improvement value, especially when using the cost approach.

Why is land sometimes worth more than the house?
In high-demand markets, the land’s development potential or location may exceed the value of existing structures.

How do I find the land value of my property?
Check your appraisal report, tax assessor records, or recent comparable land sales in your area.

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