Price by itself can be misleading.
A seller listed a 20,373 Sq. Ft. lot on Beckham St. & Ariton Rd in North Port. The seller is asking $16,800. At first glance, this lot looks like it's priced high, but in reality it’s one of the least expensive lots in the Kenvil community.
How do you get a better picture of what you're buying?:
If you’re buying lots, the Square Foot Price can tell you if you're paying high, low or the fair market price. If you're buying Land by the acre, use price per acre, but for lots, Sq. Ft. gives you a good picture.
Square Foot Calculation:
- Lot price divided by Square Footage = price per Sq. Ft.
- $ 16,800 (lot price)
- ÷ 20,373 (Square Footage of lot)
- .82 per Sq. Ft. (price per Sq. Ft. rounded down)
By using the Sq. Ft. pricng methods, you quickly see that the seller is pricing the lot much lower than other Active lots in this area. If all things are equal, you're getting a better value for your money.
How to compare local lot prices:
- Compare available lots within your selected neighborhood by location, size & shape
- Divide the prices of your chosen lots by the Square Footage of each lot
When you figure out the Sq. Ft. price, you’ll get a better picture of whether you’re buying high, low or at fair market value. In many areas, you may have a wide-range of prices for Active lots. In areas with big price differences, you will also want to do a sales comparison which shows you what prices have actually been paid in the area.
Other Considerations:
In North Port FL, you have many options. You can buy a lot on a freshwater canal or a non-canal parcel. The difference in price in a given area can range widely. A freshwater canal can fetch a 20 -to- 25% price premuim. In some instances, it may fetch a 50% premium and may be worth the additional money. You can adjust the price of a canal or a non-canal lot up or down depending on the lot you’re trying to compare it to.
How to adjust for differences
To make adjustments, more information and an additional calculation is needed. If you look further at each lot in the price per sq. ft. list, you will find that the last two lots are located on a canal. Therefore, if you're using the canal lot as a comparison to a non-canal lot, an adjustment is needed to determine if you are paying a high, low or a fair market price for your non-canal lot.
It's best to compare lots with similar features instead of adjusting a lot with a unique feature.
Keep in mind, that if you have many non-canal lots to use for comparison, you're better off excluding the canal lot and visa versa. If you don't have enough similar lots to use for comparison purposes, then an adjustment to the canal lots may help you.
There are different ways to go about analyzing non-canal or canal lots. If you’re interested in a non-canal lot:
- you can eliminate canal lots from your analysis, or,
- you can reduce the price of the canal lot by 20 -to- 25% to adjust it’s value against the lot you’re interested in, and then figure out the new Sq. Ft. price based on the adjusted canal price.
Adjusting the price of the canal lot can help you compare them against the non-canal lot you’re interested in buying. You can now include the Sq. Ft. adjusted price in your comparison.
If you’re evaluating a canal lot, you can do the calculation in reverse adding 20 -to-25% to the non-canal lots you’re using in your comparison.
Keep in mind that this is just one analysis. You can have a CMA (comparative market analysis) prepared which shows sales comparisons, expireds etc. The Sq. Ft. analysis is a good snapshot for a quick gauge of how much you’re paying compared to other nearby available lots.
If you're building a home for yourself and you found the perfect location, paying a high price for the lot may not be an issue. If you’re a lot investor or plan on building and selling within a couple of years, then lot price matters.
