How to price raw land? (Hawaiian Paradise Park, Hawaiian Ocean View: for sale, real estate market, oceanfront) - Big Island - (HI) -The Island of Hawaii - City-Data Forum

rhbj03 · 10-23-2016, 10:12 AM

Look at the following real example of raw land pricing:

Price History

DATE EVENT PRICE
07/05/16 Price change $335,000-48.5%
04/13/16 Listed for sale $650,000+68.8%
07/23/14 Listing removed $385,000
06/21/13 Listed for sale $385,000

It is cases like this that make me weary of the listing prices that I see. It seems sellers are just making up prices to see if any buyer is stupid enough to bite.

How does one go about determining fair market value for raw land?

Traditionally we look at comps; but in the case of Big Island there have been few in the past couple of years; and especially with the lava flow situation emerging in the past couple of years, the fair market value seems to become even more murky...

Can we go by the county's assessed value? Some agents have use that to justify listing prices, but that number seems to be in the process of downward adjustment also, as I have seen in a couple of cases.

Any thoughts on this?

hotzcatz · 10-23-2016, 11:19 AM

How to find the going rate for sold land? Same as with Ebay - check SOLD prices. Listing prices don't mean doodly squat. Frequently folks list astronomical prices just as a fishing technique. If someone bites, great, if they don't, then by lowering the price later that will bring their listing back to the top of the heap again.

There's also overall trends. The real estate market around here used to run in seven year cycles from peak to peak but that cycle pattern was broken after 2005. The last big peak on this island was late fall in 2005 and then the market dropped and kept on dropping past when it should have turned back up again.

Other than 'fair market' the other values are generally location, location and then and again, location.

Is there access to the land? How long does it take to get there from anywhere else? Are there views? What's the topography? Is there soil? Is in a flood zone? Is it in a lava zone? Noisy neighbors? Are there CCRs? (Covenants, Codes & Restrictions) Is there a mandatory homeowner's association? What liabilities are involved with that? Who fixes (and pays for fixing) the roads? Utilities?

The overall location of the land - what sort of crime statistics for the area? What access is there to markets & entertainment? What is your life going to be like living in that area? Not that this is directly related to the actual 'fair market value' of the land, but something that should be taken into consideration if you're planning on living there.

terracore · 10-23-2016, 05:19 PM

A real estate agent can answer such questions. There are a lot of generalizations that can be made based on the neighborhood. For example, a 3 acre spaghetti lot in Orchidland usually fetches around 30k. A one acre lot in Hawaiian Paradise Park is usually around 40k. Square lots cost more. A desolate acre in Hawaiian Ocean View Estates is about 5k. A small lot in Nanawale is about $6k. All examples are +/- a few thousand. Lots further away from pavement or without access to grid electricity, internet, mail delivery, etc are cheaper. Since you're on the internet now, you'll want to make sure you are buying property that has access to it if that is important to you. There are some areas that have no access other than satellite and the bandwidth caps on satellite or cellular (if available) are brutal. When I bought in Orchidland Hawaiian telcom told me our house was wired for DSL and it was available. But when we tried to activate it, they told us there "were no ports available". It took them nearly 5 years to make the internet work to a house that was wired for it and less than 3 miles from the highway and it took an FCC grant to make even that possible.

Howleeboy · 10-23-2016, 11:45 PM

In my opinion, land, like anything else, is worth what someone is willing to pay for it. You can only use the best comps available to establish the current value of any real estate. If the comps re out of line, the market will always correct itself.

rhbj03 · 10-24-2016, 06:48 AM

Unfortunately my experience has been that local real estate agents are not keen to answer more than 2-3 questions, and any offers more than 5% below asking price seem to be considered "low-balling". So I have to do my own research, part of which is coming here to ask for your expertise.

Below are 5 OCEANFRONT properties currently for sale along the coast between Hawaiian Paradise Park and Hawaiian Beach. All front the ocean; all but one are raw land. For the one with house I have prorated the asking price for just the land based on county assessment of land and house. Since they are all along the same stretch of shore -- in fact a couple are next to each other, and another couple are 3 lots away -- the land features other than shape and size are almost identical. Below are pictures of the coast, the land, and the county access road. The pretty much describe each and every property.

In addition, I have listed out their asking prices, land shape, acreage, and per-acre prices side by side. As you can see, the per-acre price range from 40K to 109K. Your comments on the comparative and absolute land prices are welcome and appreciated.

smarino · 10-24-2016, 05:22 PM

The value of the lots is whatever someone is willing to pay for them. All prices are in fact "made up", as that is how it works w/ anything you buy or sell. Even when looking at comps regarding houses on lots, one home may be totally different than the ones you are comparing them to, so it's sort of a useless thing to do, but one that realtors like to play around with because they can make a property look really attractive by picking out the "right" comps to compare it to. Caveat emptor!

Just a little heads up on this.....don't even think of buying anything w/o being on the island and looking around extensively at what is for sale. In addition, make sure you understand what you would be buying, especially regarding lava zones, VOG drift, rainfall, temperatures at elevation, ability to insure (or NOT) etc. An ounce of prevention could prevent a ton of misery.

leilaniguy · 10-24-2016, 06:06 PM

The first picture is Government road, taken when the roadway had just been "improved" as the coastal escape route during the lava flow 2 years ago. Don't expect it to look that good today.

Arktikos · 10-24-2016, 06:20 PM

Hard to evaluate those lots by the images given, though the larger ones seem more attractive because they're wider in addition to having more acreage. Adjacent parcels for those don't appear to be developed either.

A really beautiful area with great potential, I believe. The heat and humidity of lower Puna would be moderated by the ocean breeze, but it still can get hot there. More sun and less rain than most Puna locations too. No vog from Pu'u O'o either.

leilaniguy · 10-24-2016, 06:38 PM

Also check the zoning as it looks like those lots are zoned conservation or sma. You can build on them, but not oceanfront and you cannot clear the lots all the way to the shore.

terracore · 10-24-2016, 08:27 PM

"don't even think of buying anything w/o being on the island and looking around extensively at what is for sale"

Before we moved here we did the normal online sleuthing at properties we wanted to look at and were amazed when we actually looked at them and found they looked nothing like the pictures. The pictures weren't faked, they were just taken to show everything in the absolute best possible way and none of the negatives were captured. All that being said, I have seen properties for sale on eBay where the pictures were taken before the lava paved it in Royal Gardens.

Those lots are in a higher price bracket than what I would call "cheap land", so I would expect them to be less barren than what I described before. Those pictures really do look nice.