Definition of "Land cost"
As a collective noun, land cost means the total cost of purchasing a parcel of land or lot with specific land use and ownership. The land cost includes the purchase price, closing costs, commissions, and finance charges.
Factors determining the land cost
How much does land cost, you may wonder? When considering a land purchase, you must reckon with the following expenses. You must pay the purchase price for the seller for the land in question. Then, you have to acquit eventual financial burdens, encumbrances, for instance, uncovered real estate property taxes. You might also have to pay for liens or mortgages on the land.
Don’t forget about closing costs either! The terms in the purchase contract between homebuyers and sellers stipulate the closing costs. Still, the buyer pays for most of them typically. They include title insurance, attorney’s fees, survey cost, payments for various departments conducting title searches, and land sale registration. For sure, well-thought-up negotiating tips can lower your closing costs!
In some instances, you have to get ready to pay for additional costs, such as preparing the land to serve your purpose with it. You might have to remove trees and existing buildings. Besides,incorporating a new drainage and grading (ground elevation) system can be topical.
Last but not least, you must calculate how much property tax you will pay.
What is a tract of land, parcel, and a lot?
A parcel is a section of a more extensive tract of land, and it forms the basis of the land registration system. A tract is an identifiable piece of land. Land surveyors assess it. Besides, it has well-defined borders established in a legal deed. Additionally, a tract of land generally includes multiple lots.
A lot forms the very basis of taxation and property sale. You can see many well-defined properties, i.e., lots on Google Maps that the county or local government office has registered. However, note that a lot doesn’t presuppose a specific type of measurement! Every lot is different in size and can be sold in an individual contract for a land cost.
Do the math!
By rule, 40 acres make up a parcel. A parcel has four sides, each measuring 1,320 feet. It all adds up to a square mile counting 640 acres. Besides, each side measures 5,280 feet.
Now, how would you calculate the cost of land per acre? Specialists suggest dividing the land’s worth by the size of the land in acres. You end up with the outcome of the value of the land per acre.
(For instance, if you estimate your land at $200,000 and it is 10 acres, then $200,000/10 acres = $20,000 per acre.)
Where can you find the mostaffordable vs. the pricier lands in the US?
We all know how home prices differ from state to state. So does a piece of land’s financial value. Based on July 2021 statistics, analysts pointed out that the top five most expensive states where you can buy land were mainly in the Northeast: New Jersey ($196,410 average cost per acre), Rhode Island, Connecticut, Massachusetts, and Maryland. On the other hand, Wyoming, New Mexico, Nevada, South Dakota, and Montana offered the most affordable land prices.
Ask local real estate agents about available properties and their land cost in your area!
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