How do you determine a price for a piece of land that will never be developed?

Our neighbor owns the lot behind our house. It is a rocky slope that has a wet weather creek. It will never be developed. It sits between our back yard fence and another house's backyard fence. We want to purchase it. Our neighbor will sell. Neither of us knows what it might be worth. We are really the only people that can use it. There is a small fairly level area that we would like to put a small workshop/ tool shed on. The rest of the land is just a mess. There is approximately 9000 square feet. How do you set a price on a piece of land that can't be developed and has limited use?
In Buying Property - Asked by Treena H. - Nov 1, 2008
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Answer(s)

Ed H.
Developer
Atlanta, GA

The simple answer is the price is determined by what a willing buyer is willing to pay a willing seller. One possible yardstick is dividing tax value for the neighbors lot by the total sq footage and then assigning the value to what you want to purchase. Be careful not to cause your neighbor issues with setback requirements for his lot.

Nov 1, 2008
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loopnet l.
Researcher
Coeur D Alene, ID

Check with the county assessor for the taxable value. Also compare land value of other vacant lots or homes with double lots near your home. The later is the best (subtract your lot value from the double lot value) But really it's about supply and demand and the demand for this property is 2. He's lucky you want to buy it otherwise it's just a tax liability every year. With this type of situation the price will probably boil down to who is more emotionally attached to having the property. break down the land value of the adjoining property by square foot and multiply that by the square footage of the lot. I would make this number the ablosute high number I would pay. My goal maybe to pay half that since it's not buildable and my starting point would be below that.

Nov 2, 2008
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J.P. JOHN P.
Broker/Agent
Toluca Lake, CA

Check with your tax assessor's website or go direct. See if there are landlocked parcels that have sold in last few years. Divide the price by the squre feet of the lot and that should be close to the price per square foot for your lot. Compare to see if these lots are buildable. Lots that are too small to build can also be usefull for comparison.
Go to a MLS site (as GUEST) and view lots for sale - look for "useless" lots. These will give you a rough idea.

Nov 2, 2008
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Lynn L.
Broker/Agent
Artesia, CA

Simple, the land is worth zero. You will be doing the neighbor a favor to take it over for $1 and pay the taxes and insurance on it.

Nov 3, 2008
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Lynn L.
Broker/Agent
Artesia, CA

Simple, the land is worth zero. You will be doing the neighbor a favor to take it over for $1 and pay the taxes and insurance on it.

Nov 3, 2008
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Daniel B.
Broker/Agent
Houston, TX

From my understanding the value of the land determined by the highest and best use of the land.

Mar 10, 2010
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