Location, dirt value, timber value, positives and negatives, it’s that easy! The location is of the utmost importance because even if you find a great deal but…. it doesn’t support your wants and needs, it’s not a good deal for you unless you look at it as an opportunity, but that’s another subject. Dirt value simply means the worth of the raw land without consideration of any of its other assets. Timber value is the current market value of the tress on the parcel of land. Now, the market value is the sum total of the property’s assets less any quantifiable negatives or liabilities.
As for the location, stay focused and look at property in Alabama that suits your needs and don’t waste your time and others by looking elsewhere. Sometimes a real estate agent will bring you a “spectacular deal” on a property that is nowhere near the area you are focused on. Keep in mind, a real estate agent’s ultimate goal is to sell property…any property. You should make them understand up front that your are looking for acreage in a specific area of Alabama. Most realtors will comply with your intentions. If not, promptly fire them and find one who will! There is no shortage of honest, hard working agents that will comply with your requests. Don’t waste your valuable time trying to work with an agent who won’t listen to your requests.
Evaluating the “dirt” can be complicated. Why? How many properties in the area are completely clear of timber and have just been sold? Keep in mind I mention “recent sales”. A property’s market value is based on recent transactions on land that is comparable to the parcel you’re currently evaluating. These are called comps, short for comparable or like properties. To estimate the value of the dirt, it’s best to work it out backwards. Using the purchase price of a comparable property, deduct the value of the assets (timber, etc) and the remaining balance is your estimated dirt value.
It’s typically simple to ascertain the value of the timber. Ask the seller for any timber info, if none is available, simply ask the seller to hire an Alabama licensed, registered forester to either give an estimate or a full evaluation on all merchantable and future merchantable timber. If you’re serious about the property, try to work with the seller if they balk at hiring a forester. When you have the timber estimate, add that value to your total. Just remember that timber is sold by volume (its weight) and prices per ton are constantly changing due to their demand. Another thing to remember is that there are several kinds of timber and markets for each type. Historically, timber prices and markets fluctuate within a certain range, so consult with the forester to understand the typical norms in market prices.
Next you identify any other assets and liabilities and list them separately. Assets to go in the “plus” column would be mineral rights, roads, power, water, lakes, ponds and any structures on the property. Liabilities would consist of anything you do not need and cannot sell.
Well, that’s basically it in a nutshell. But, remember to take into consideration a few intangibles like distance from your residence, hunting and recreational uses of the land and even potential for development in the region. So, good luck and I hope these few notes help you on your way!
Alabama Land For Sale