When it comes to selling real estate, sellers have their fair share of responsibilities before they can put their properties on the market. One of them is the real estate appraisal that is usually done to value real property. But when it comes to vacant land, does the appraisal requirement apply?
A real estate appraisal, also known as property valuation or land valuation, is the process of retrieving the market value for a piece of property. Appraisals are usually required to sell a piece of real property because their values differ based on a property’s unique characteristics, condition, location, etc.
As to whether or not land selling requires an appraisal, there’s no answer set in stone. This is because it depends on your unique situations and how they affect sale of your vacant land.
When Do You Not Need an Appraisal?
An appraisal is not required if your land is not involved in the following:
- A trust that requires an appraisal to sell
- A will that requires an appraisal to sell
- A divorce or dissolution of marriage that requires an appraisal to sell.
If your land is not subject to the above, an appraisal will likely not be required. Instead, you can request that your real estate agent complete a Broker Price Opinion (BPO) or Comparative Market Analysis (CMA) to allow you to identify the value your property can bring in a sale.
Land Appraisal vs. BPO/ CMA
If your land does not require an appraisal in order to sell, a BPO or CMA is adequate to help you determine the estimated selling price of your property. While similar, these two things have their fair share of differences in terms of coverage, definition, parties involved and required information.
A land appraisal is conducted to determine the appraised value of a piece of real property. It is conducted by a licensed appraiser who examines the market value or the most probable price of a property at a specific point in time. For an appraisal to be valid and effective, it needs to contain all the required information set forth by the Uniform Standards of Professional Appraisal Practice (USPAP).
In lieu of an appraisal, a Broker Price Opinion (BPO) or Comparative Market Analysis (CMA) can be completed to determine the estimated selling price of a piece of real property. Instead of being conducted by a licensed appraiser, a BPO or CMA can be completed by a licensed real estate broker or agent.
Because BPOs and CMAs are less formal and official compared to land appraisals, they do not need to meet the requirements of the Uniform Standards of Professional Appraisal Practice. Due to less stringent requirements, these documents are much cheaper and can be completed in a shorter amount of time. Further, whatever you spend on a BPO or CMA can be rebated back when you close your sale.
What Information Do You Need to Provide to Complete a Land Appraisal or BPO/ CMA?
Whether you are looking to conduct a land appraisal with a licensed appraiser or a BPO/ CMA with a real estate broker or agent, you need to provide them with the following information:
- Client name
- Client address
- Contact person
- Contact details, including phone, fax, email address
- Property address
- PID number
- The legal description of the property
- Type of property, whether bare land, a mix of tillable and non-tillable
- Improvements on the property
- Whether or not the property is irrigated
- Whether or not the property is tiled
- Contact person for more information about the property or access to the site, as well as their contact details.
It will also be helpful to your appraiser or real estate agent if you provide these additional data (if they are available to you):
- Conservation maps or practices
- FSA 156 form
- Home inspection reports (involving termites, septic systems, wells, etc.)
- Surveys and MLS data
- Title policy that describes encroachments or easements
- Written property agreements
In some cases, your appraiser or real estate broker may ask for additional information. But these are the basic ones that you will need to prepare and provide beforehand. Giving this to the professional in charge of appraising your land or completing a BPO/ CMA can help speed up the process and create a well-researched market value/ selling price that you can use as a basis for selling your land.
Make an Informed Decision
As a general rule, you don’t need a formal land appraisal if your property is not involved in any trust, will, or divorce/ dissolution decree that requires an appraisal. But to determine the proper selling price or market value of your land, it’s recommended that you conduct one or a BPO/CMA as an alternative.