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Land appraisal: how an appraiser values vacant land

An appraiser values vacant land by deciding its highest and best use, then comparing it with verified sales of similar land and adjusting for the differences. In North Carolina, the appraiser holds a credential from the North Carolina Appraisal Board and follows USPAP.

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Quick summary: This guide explains how a licensed appraiser values vacant land in North Carolina, from highest and best use to comparable sales and adjustments. It is for landowners who want to know what an appraisal measures before they sell, borrow, or settle an estate. The key takeaway: the value rests on what the land can legally and physically become, and on verified sales of land with the same use.

What a land appraisal is

A land appraisal is a written opinion of the value of an identified tract, prepared by a credentialed appraiser as of a stated date. North Carolina law defines an appraisal as an analysis, opinion, or conclusion of the value of identified real estate, performed for compensation.

An appraisal states its intended use and its effective date. A lender, an estate, a court, and a seller can each order one. The value is an opinion for that use on that date, not a sale price.

The standard appraisers follow

Appraisers follow the Uniform Standards of Professional Appraisal Practice, called USPAP. The Appraisal Standards Board of The Appraisal Foundation develops and updates it. In North Carolina, an Appraisal Board rule requires every registered trainee and every licensed or certified appraiser to comply with USPAP. The rule names the Ethics Rule, the Competency Rule, the Scope of Work Rule, and Standards Rules 1 through 4, among others.

Federal land purchases use a second standard on top of USPAP: the Uniform Appraisal Standards for Federal Land Acquisitions. It spells out the land valuation steps in detail, and this guide uses it to describe them.

How an appraiser values vacant land

An appraiser values vacant land in two stages: first the highest and best use, then the comparison with sales.

Highest and best use comes first

The appraiser first decides what use gives the land its highest value. The federal standard sets four tests. The use must be physically possible, legally permissible, and financially feasible, and it must result in the highest value. Each test must be analyzed.

For vacant land, the appraiser judges the land as if vacant. If the highest and best use depends on a rezoning, the appraiser must analyze how likely that rezoning is. A tract zoned for farming does not take a subdivision value because a buyer hopes for a rezoning. See A zoning label is only the beginning.

The sales comparison approach

For unimproved land, the sales comparison approach is the primary method. The appraiser studies sales of land with the same highest and best use, as close in location and time as possible. Each sale is confirmed with a party to it. The analysis uses a unit of comparison that the market uses, such as price per acre. The subdivision development method is reserved for rare cases.

What adjustments cover

The appraiser adjusts each comparable sale for the ways it differs from your tract. The federal standard lists the basic elements of comparison.

Element What it covers
Property rights conveyed Full ownership, or ownership less timber, minerals, or an easement
Financing terms Seller financing or other terms that changed the price
Conditions of sale A sale between relatives, a forced sale, or a sale to an assembler
Expenditures after purchase Demolition, clearing, or other costs the buyer paid at once
Market conditions The change in prices between the sale date and the effective date
Location Road frontage, the neighborhood, and the distance to services
Physical characteristics Size, shape, topography, soils, wetlands, and floodplain
Economic characteristics Income the land produces, such as a lease
Legal characteristics Zoning and other land-use rules
Non-realty components Equipment or other items included in the sale price

An appraiser makes a numeric adjustment when market data supports it. When data is thin, the appraiser ranks the sale as superior or inferior instead.

The short version: Two tracts with the same acreage can appraise far apart. The appraiser values usable ground for its lawful best use, measured against verified sales of land with that same use. See Gross acres vs net acres: finding the usable land.

Appraisal, tax value, and a broker price opinion

An appraisal, the county tax value, and a broker price opinion are three different numbers from three different people.

County tax value. The county assessor values land at market value: the price between a willing buyer and a willing seller, neither under compulsion. Each county must reappraise all real property at least every eighth year, so the tax value can lag the market. Qualifying farm and forest land can be taxed at present-use value, which rests on the land’s ability to produce income in its current use.

Broker price opinion. A licensed broker can prepare a broker price opinion for a fee. It must carry a statement that it is not an appraisal and cannot replace one. A broker may not prepare one as the basis of value for a mortgage loan origination.

Appraisal. A credentialed appraiser prepares it under USPAP, for a stated intended use. It is the document a lender, a court, or an estate usually asks for.

Who may appraise land in North Carolina

The North Carolina Appraisal Board issues appraiser credentials. The Appraisers Act names four classes: registered trainee, licensed residential real estate appraiser, certified residential real estate appraiser, and certified general real estate appraiser. A person who acts as a licensed or certified appraiser without the credential commits a Class 1 misdemeanor.

The act has exceptions. A person can appraise standing timber without a credential, as long as the appraisal does not value the land. An owner can appraise its own property for its sole use.

Check a credential with the board’s appraiser search before you hire. Then ask whether the appraiser’s credential and experience cover vacant land like yours. USPAP’s Competency Rule puts that question on the appraiser too.

Take action: Before you order an appraisal, find out which kind of buyer your tract suits and what the record shows about it. Start with Is your land a data-center site?

What to gather before the appraiser arrives

Gather the documents that answer the appraiser’s questions about use, size, and rights. Each one removes a guess.

  1. The recorded deed and any plat, with the parcel number.
  2. A boundary survey, if you have one.
  3. The zoning district and any overlay, from the planning office.
  4. Any perc test or septic permit. See Perc test: what it is and what it costs.
  5. Any wetland delineation, flood map, or soils report.
  6. Recorded easements, and any timber, farm, or hunting lease.
  7. Written responses from water, sewer, or power providers.
  8. Sales of nearby land that you know of, with dates.

For a first sense of price before the appraisal, read How much is an acre of land? and run the numbers in Price per acre, both directions. If timber or a farm lease is part of the sale, see Selling farm or timber land for development.

Key recap

  • A land appraisal is an opinion of value for a stated use on a stated date, prepared under USPAP by a credentialed appraiser.
  • The appraiser decides highest and best use first: physically possible, legally permissible, financially feasible, and highest value.
  • For vacant land, the sales comparison approach is the primary method, with adjustments for rights, terms, time, location, and physical and legal traits.
  • County tax value, a broker price opinion, and an appraisal are three different numbers. Only the appraisal is prepared under USPAP.
  • The North Carolina Appraisal Board credentials appraisers. Check the credential before you hire.

Questions

How is vacant land appraised?

The appraiser decides the land’s highest and best use, then compares the tract with verified sales of land with the same use. Each sale is adjusted for differences in rights, terms, market conditions, location, and physical and legal traits.

Is my county tax value the same as an appraisal?

No. The county values land at market value but reappraises at least every eighth year, and qualifying farm or forest land can carry a present-use value. An appraisal values your tract on its own effective date for its own intended use.

Can a real estate broker appraise my land?

A broker can prepare a broker price opinion for a fee, but it must state that it is not an appraisal. Only a person credentialed by the North Carolina Appraisal Board can act as a licensed or certified appraiser.

What raises an appraisal of vacant land?

Documents that settle the highest and best use, such as a survey, a perc result, a zoning confirmation, and utility responses. They give the appraiser facts in place of assumptions about what the land can become.

References

Primary sources cited on this page, in APA style.

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