What is the best way to value land?

Valuing land accurately is essential in property tax assessments and real estate transactions. The most effective method for determining the value of land is through recent comparable sales. This approach relies on analyzing sales data from similar properties that have recently been sold in the same area. By examining the price per square foot or per acre of these comparables, one can establish a market-driven value for the land in question. This method effectively reflects current market conditions and trends, making it relevant and reliable.

Using the original purchase price to value land can be misleading as it does not account for changes in the market or the economic conditions that may have occurred since the time of purchase. Ground leases might provide insight into the potential income generated from a property but do not directly determine land value itself. The income approach, while useful for valuing income-producing properties, relies heavily on projected cash flow and capitalization rates, which may not be directly applicable to raw land that is not currently generating income. Thus, recent comparable sales provide a more accurate and straightforward methodology for determining land value.