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  1. #1

    Default Calculating land value - per square metre price

    Just thinking about buying an existing residential property (house on land), then demolishing the house and building new.

    For various reasons the house does not have much value, therefore at auction, I want to bid based on land value. I have mentioned this to the agent and he believes this is fair, given the circumstances of the sale.

    I do have the RV from the rates installment, for the land value. I then divided the square metre area by that value to arrive at what the land is 'valued' at, per square metre...

    My question is this; What is the most accurate way to calculate a median or average land value, per square metre, in any given suburb?

    I am concerned that if I looked at the rates RV of several properties in any one area of a certain suburb, that there would still be an 'over inflated' price (as land still seems to be overvalued).

    Is my method of thinking correct here, and does anyone have any formulae or ideas re this?

    Many thanks.

  2. #2
    Join Date
    Sep 2008
    Posts
    4,753

    Default

    find the local council website

    find it's rates page

    put the address of the property you are interested in

    and you should get a CV which is made by adding LV, land value and IV, improvements value

    it should also show the size of the property

    divide the LV by the area and you'll get a value per m2

    then do the same for 3 or 4 properties around it to make sure the LV is about right
    people keep trying to rewrite the world as themselves

    like that'll work...

  3. #3
    Join Date
    Sep 2009
    Location
    Republic of Ponsonby
    Posts
    84

    Default

    Under the method you talk about above you will get to the land value the valuers at QV used as part of the rating assessment for each property.

    While this may give you an interesting insight, I'd be wary of bidding at auction based on this. Presumably the GVs were done a year or two ago when the property market was a bit better?

    Personally I'd primarily look at asking prices for sections, even if you have to go a few suburbs away to get an idea. If you are on good terms with the agent, ask if they can send you sales of sections within the area over like 18 months. Even in the most built up suburbs there should still be a few.

  4. #4
    Join Date
    May 2005
    Location
    Auckland
    Posts
    265

    Default

    Id get the agent to give you sales figures for all the new houses sold around the section and work out your price from there.

    Allow about $1500 per sqm to build(in Auckland), interest payments while building, agent fees if selling and a bit of profit and you are left with what the section is worth to you.

    Allan

  5. #5

    Default No sections available in area

    Unfortunately that is the problem - there are simply NO sections for sale in the area. It's full! Ok what I may do is look at the Rvs of several similar size sections in the area, average a price and then deduct, say 20% for the drop in prices. How does that sound? I have to get some idea of what land is worth in this area!

  6. #6
    Join Date
    Oct 2003
    Posts
    3,578

    Default

    I would work backwards.

    What will be the house be worth when finished.
    take away profit margin
    take away build price
    take away demolition price
    that is your ceiling price.

    The market value is irrelevant. If you cant make your profit margin, the project is not worthwhile.

  7. #7
    Join Date
    Nov 2008
    Location
    Karratha WA
    Posts
    1,428

    Default

    For your price:
    As alhoon says, work out how much the section with the house you will build on it would sell for. Take off costs (including demolition/removal) and whatever profit would make it worthwhile to you & the remainder is your top bid. You should have a spreadsheet for this so you don't miss anything if you are looking around a bit.

    For the price others may be thinking:
    Mr Bond knows what he is talking about, judging by previous posts, so I would think hard about his reply.
    Get an agent from the firm selling the property to come up with section sales for the past 3 years, over a large area. Adjust the prices with your knowledge of better or worse area, and how the market has altered over that time.

    I am guessing the site will go to someone willing to pay, for non-practical reasons, a lot more than you . It seems to me that if this is the only cheap site for miles with no vacant sections around it may well sell for a premium. Or someone may love the scrapheap that is on it (or think they do til they look closer) and buy it as a do up.

    Good luck.

    PS: A section worth 600 sqm will not be worth exactly 6/7ths of a 700 sqm section, so don't bother with that calculation.
    Last edited by Tan; 27-10-2009 at 12:49 PM.

  8. #8

    Default

    Ok thanks for all your ideas.

  9. #9
    Join Date
    May 2005
    Location
    Tauranga
    Posts
    76

    Default

    Talk to a valuer and ask how their valuations for the land percentage of a property comparies with land valuations in R.Vs in your area of interest

  10. #10
    Join Date
    Sep 2004
    Location
    Central Otago, ChCh, AKL
    Posts
    2,017

    Default

    My question is this; What is the most accurate way to calculate a median or average land value, per square metre, in any given suburb?
    Talk to a friendly Valuer.
    Ask the agent to show you some comparable sales for sections in the area.

    Where is it in the country?

    in Chch some areas have "going $ rates for m2" but this is only in some pocket's in particular Zoning.
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