ALC key terms

The reasonably probable, legally permissible, physically possible, financially feasible use of a property that produces the greatest value. Appraisers test these four criteria in order before concluding a use.

A temporary use of land that is not its highest and best use but produces some income while the parcel waits for transition to a higher use. Common with older farm buildings in the path of development.

Parcel whose character is shifting from rural or undeveloped use toward urban or developed use, often at the edge of a growing city. Value is driven by development potential rather than current income.

The increase in unit value created when two or more adjacent parcels are combined into one larger tract under single ownership. The whole is worth more than the sum of the parts.

The process of acquiring adjoining parcels to create a larger, more marketable or developable site. The buyer often pays premiums to the last holdout owner to complete the tract.

An owner who refuses to sell a parcel needed to complete an assemblage, often to extract a premium price. A single holdout can block or reshape an entire development plan.

The process of evaluating and choosing a parcel for a specific development or use, weighing access, utilities, zoning, topography, visibility, and market demand. It precedes acquisition and often includes comparing several candidate sites.

The process and result of obtaining government approvals such as zoning, subdivision, and permits that give a parcel the legal right to be developed. Entitled land typically sells at a premium over raw land.

An administrative exception allowing a property owner to depart from a specific zoning rule, such as a setback or height limit, because of unique hardship. Variances are narrower than rezonings and run with the land.

A local government's long-range policy document guiding future land use, growth, and public facilities. Zoning and subdivision decisions are supposed to be consistent with it.

A recorded map showing the division of land into lots, blocks, streets, and easements. Recording a plat is the formal step that creates legally separate buildable lots.

The division of one parcel into two or more lots, typically subject to local subdivision rules, minimum lot size, and frontage requirements. Small divisions may qualify for simplified approval.

A platted lot that exists on a recorded map but has no improvements, utilities, or legal access. Paper lots are common in old subdivisions and often trade at deep discounts.

Buying finished or near-finished lots at a bulk discount and reselling them individually to builders or retail buyers. Profit comes from the spread created by retailing a fragmented inventory.

The price a single finished lot commands when sold individually to a builder or end user. It is typically higher per lot than the bulk or wholesale price paid for the same lots in quantity.

The reduction in per-unit price a buyer obtains by purchasing many lots or parcels in one transaction. The discount compensates the buyer for absorbing inventory and market risk at once.

The pace at which available lots or homes are sold in a market over a given period, usually expressed in units per month. It drives how much inventory a developer can safely release.

Acquiring and holding undeveloped or transitional land for future resale or development, expecting appreciation over time. Carrying costs and time horizon are the key risks.

Undeveloped land with no improvements, utilities, or approvals in place. Its value rests on location, access, natural features, and future development potential.

A parcel with no legal access to a public road, which severely limits its use and value. Access may be obtained through an easement, land purchase, or legal action.

A legal right to use another person's land for a specific purpose, such as access, utilities, or drainage. Easements run with the land and bind future owners.

A voluntary legal agreement that permanently restricts development on a property to protect its natural, agricultural, or scenic values. It can reduce taxable value while the owner keeps title.

Areas saturated by water often enough to support specific vegetation and soils, regulated by federal and state agencies. Filling or altering them usually requires permits and may shrink usable acreage.

Land adjacent to a waterway that is subject to periodic flooding, often subject to building restrictions and insurance requirements. Its boundaries affect usable area and development cost.

A valuation method that estimates value by analyzing recent sales of similar properties and adjusting for differences. It is the most common approach for vacant land and rural tracts.

A dollar or percentage change applied to a comparable sale's price to account for differences from the subject, such as size, location, access, or improvements. Adjustments are applied to the comparable, not the subject.

A valuation method that converts a property's expected income into value, typically by dividing net income by a capitalization rate. It is used for leased farmland, timberland, and income-producing land.

A ratio expressing the relationship between a property's net operating income and its value or price. Dividing income by the rate gives an indicated value.

A valuation method that estimates value as the cost to replace or reproduce improvements, less depreciation, plus land value. It is most reliable for new or special-purpose improvements.

A unit of comparison used to value large tracts by dividing sale price by acreage and comparing dollars per acre across similar properties. It works best when parcels are reasonably homogeneous in character.

An independent, written opinion of a property's value as of a stated date, prepared by a qualified appraiser using recognized methods. Lenders and courts rely on appraisals for financing and disputes.

Land managed primarily for growing and harvesting trees, valued on both its standing timber and its land. Income comes from periodic harvests, and management affects long-term value.

A field survey that estimates the volume, species mix, and quality of standing timber on a tract. Its results are central to pricing timberland and scheduling harvests.

The value of standing timber as sold by the landowner to a logger, before harvesting and hauling costs. Stumpage prices vary by species, size, and distance to mills.

An auction in which the property is sold to the highest bidder regardless of price, with no reserve or minimum. It attracts bidders but leaves the seller exposed to market risk.

An auction in which the seller may reject the high bid if it does not reach a stated minimum price. It protects the seller but can discourage bidder participation.

A fee added to the winning bid and paid by the buyer, often a percentage of the hammer price. It is disclosed in advance and generally split with the auctioneer or house.

A written agreement granting a tenant the right to use farmland for a stated term in exchange for rent, which may be cash or a share of crops. Terms cover improvements, termination, and conservation practices.

A farm lease arrangement in which the tenant pays a fixed dollar amount per acre regardless of yields or prices. The landlord bears little production risk but shares less in good years.

A farm lease in which the landlord and tenant split crop proceeds and often input costs in agreed proportions. The landlord shares production and price risk and typically contributes land and sometimes equipment.

Choosing a parcel for grape growing based on climate, slope, aspect, soil drainage, frost risk, and water availability. These physical factors strongly influence fruit quality and long-term value.