What are Land Valuations?
Land valuations are an important part of property procedure. But not only what they are, but how they are calculated and used matters. We will run through the basics to answer the question what are land valuations and then hopefully go deeper. This should help you to understand the whole process and how they impact you and your finances.
What are Land Valuations?
We start with a relatively simple term to kick us off. An unimproved valuation is a consideration of the value of a piece of land without any improvements. Improvements is a generic way of saying anything other than the basic land including your house, your driveway, your pets. Whatever is built, created or moved in by you is an improvement.
Hence, the unimproved value is the pure value of the land. This is a crucial baseline to the whole valuation process. It is also a very important number to understand the true split of value on your property. Which part of your property, the structure or the land, is causing the largest increase in price. Knowing this sets you up to better understand all kinds of things. Such as the decision between renovating and rebuilding.
The other form of valuation that is commonly acquired is a property valuation. This is the value of the piece of land with all permanent improvements in mind. Hence, this will take into account your home, your pool, but not your pets. This is a better measure for understanding the value of your asset.
An unimproved valuation is typically a value used to levy land taxes and the like. Whereas a property valuation is used to set the value of a home. This is often slightly different from the market value of a home.
Hopefully this cuts through the linguistic barrier holding many back from understanding their full situation. It should give a clearer picture to the question what are land valuations, now, how do they work?
How are Land/Property Valuations Acquired?
There are a few different ways of acquiring land and property values. The main two are; through an automated system or through a professional valuer. An automated system gives a generic reading without taking into account smaller details. While a professional valuer will take in all the facts and differences.
Both work on a similar method however, they use a baseline of house sales in the area, of similar properties, pieces of land etc. This gives an insight into the local market. The step a professional valuer will take then is to adjust their numbers for differences with your property. Everything from size to view to the type of grass.
Why are Land and Property Valuations Important?
Land and property valuations are crucial. Here is a few reasons why.
- Valuations give you an idea of the value of your home, with a distinction between your land value and your property value.
- They are the number used to assess your levy rates, such as land tax
- They give an insight into the negotiation process for buying or selling
- Give an insight into the local market
- They allow you to focus your efforts on improvements to your property that will most increase its value