Using Redfin to Value Vacant Land

REDFIN

There’s a common dilemma I’ve always had to wrestle with when buying vacant land. The issue boils down to valuation.

Land is a peculiar type of real estate because in the vast majority of cases, it is EXTREMELY difficult to come up with a rock-solid, 100% reliable “market value” for this type of property (ask a professional real estate appraiser and chances are, they’re basically “winging it” in this area, because the data just isn’t there).

So how are we supposed to have ANY confidence in the value of what we’re buying? I’ve always maneuvered through this process by following the guidelines in this blog post, which I’ve found points to a reasonably strong conclusion – but if you’re looking for even more of a quantitative, measurable approach with which to gauge land values, I wanted to share with you an EPIC new trick I just learned about from Karl James, one of our faithful members in the REipster Forum.

redfin logoKarl uses a similar approach to the one I use to find sales comps on Zillow, but he goes one step further by analyzing the data with MUCH greater mathematical precision.

Karl uses Redfin, which provides much of the same information as Zillow, but Redfin allows users to download all the sales comp data in a CSV file. This may not seem significant at first glance, but trust me – it opens up all kinds of possibilities when it comes to analyzing the numbers and putting this data to work.

Here’s how the process works…

If you’d rather follow along at your own pace with screenshots of each step, feel free to use the images below instead…

Step 1:

For this example, let’s assume we’ve got a random lead on a vacant lot in the Lake Las Vegas area of Henderson, NV. Let’s start by going to Redfin and searching for comparable listings and sales.

In the “Find a Home” dialog box, type: Lake Las Vegas, NV.  When Redfin suggests Lake Las Vegas; Henderson, NV in the area below the text box, click on it.

Redfin1

Step 2:

Redfin will then show a satellite map of Lake Las Vegas with the city limits of Henderson, NV outlined in red. The outline can be helpful for showing comparable properties within the city limits of a particular town, feel free to turn this off (as it can also get it the way, and isn’t always relevant when finding legitimate comps.

Redfin2

Step 3:

Next, click on the Filters button near the top middle of the screen. Once the Filters dialog box pops up, do this:

  1. Deselect all of the “Property Type” options other than Land.
  2. Select all of the options under “Include” and set the time period for Sales to “Last 3 years” from the drop-down list (if using “Last 3 years” on sales returns way too may results, feel free to throttle it back to something less).
  3. Click the “Update Search” button.

Redfin3

Step 4:

Now you should see something like this on the left-hand side of the screen. It shows some properties southwest of the lake and a number of properties near the lake.

Redfin4

Step 5:

We want to get comps for a lot near the lake, so now we can use the “+/-” buttons to zoom in on the map and click and hold the mouse button to drag the map area to get just what we want to see in the left-most window.

The map window has icons showing listings and sales (the blue icons are sales, the green ones are active listings).

Redfin5

Step 6:

If you click on one of the property icons on the map, you’ll see a few things:

  1. The address for the property is shown to the left of the icon.
  2. Summary details for the property are shown on the top right side of the screen.
  3. The property is highlighted among the list of properties on the right side of the screen.
  4. If you click on “More” in the summary detail area, you’ll get more details…

Redfin6

Step 7:

The detail page for each property includes a wealth of information, including sold date.

Redfin7

You can also check out the “Property History” tab for information like the initial listing date and price, price changes, and transaction dates.

Redfin8

Redfin9

Step 8:

Head back to the previous page and scroll down to the bottom of the properties list on the right-hand side of the screen using the slide bar.

When you get to the bottom, click on the “Download All” link.  This will create a CVS file which can be opened in Excel with sales and listing information.

Redfin10

Step 9 (the longest one):

When you download your CSV file, it will look something like this…

Redfin11

When you get to the point of downloading the CSV file and making sense of the data, you’ll have to make a few edits to the list in Excel (Note: I went through these steps in the video above, starting at 4:30, but I also wanted to lay out the steps to this process below – just to make it easier to follow along):

a) Start by deleting all (vertical) columns except for the following:

  • Address
  • List Price
  • Lot Size
  • Status
  • Original List Price
  • Last Sale Date
  • Last Sale Price

Also, if you see any (horizontal) rows that have blank fields, delete those rows.

b) Then add two (vertical) columns after the “Lot Size” column and name them as follows:

  • Acres
  • $ / Acre

c) Add the following calculation into the first field in the “Acres” column:

=C2/43560

Assuming that Column C is showing the “Lot Size” (which is measured in square feet), this formula will take each of the corresponding lot size numbers and convert them to acres (note: 1 acre = 43,560 square feet).

d) Add this following formula into the “$ / Acre” column:

=IF(I2=””,B2/D2,I2/D2)

Assuming that Column I is showing the “Last Sale Price” and Column B is showing the “List Price“, this formula is telling Excel to divide the “Last Sale Price” of each property by the “Acres” in size.

Note: If the field for “Last Sale Price” happens to be blank (i.e. – if it’s an active listing), then it will calculate the dollars per acre based on the property’s current list price (rather than a non-existent sale price). Granted, the current list price is usually less reliable, but it’s still the next best option nonetheless.

e) Scroll to the bottom of your “$ / Acre” column and enter the following formula:

=AVERAGE(E2:E30)

Note: In this example, “E30” happens to be the last field in my list. You should replace this number with whatever the last field in YOUR list happens to be (see the video above at 10:30 to see what I’m talking about).

In the end, your reformatted list will look more like this:

Redfin12

Now What?

So what do these calculations do for us?

They tell us how many dollars per acre were paid for each property. 

Using this information, you can then compare and contrast it to the property you’re looking at. If you aren’t sure what the value per acre is, these numbers could give you a much better idea of what general range you should be looking at.

Admittedly, getting to the end of this process does require a higher caliber thought process (it’s not quite as elementary as my basic Zillow approach), but as I’m sure you can see (if you’ve made it this far), these extra steps can add a lot more clarity to the land values in your target area.

Don’t Forget

It should go without saying that this isn’t a fool-proof method. It’s important to remember that with any property, the size and location of the land you’re looking at is of utmost importance (e.g. – a 1-acre property on a beautiful lake is going to be more valuable than a 1-acre property next to a landfill).

This approach also doesn’t account for a host of other things that can have an effect on a property’s market value (take these things for instance). That being said – if you have no idea where to start and you’re not willing to put your trust in the county’s assessed value – this is a great way to use some highly relevant, real-world data to use as a gauge to nail down a property’s approximate market value before you make an offer.

Have fun with it!

Want to Learn More About Land Investing?

I'll be completely honest with you. Land investing is without question, the most powerful strategy I've used to build my real estate investing career.

This is a massive opportunity that most investors aren't paying attention to – and for the few land investors who know how to pursue this business with the right acquisition strategy, it's an extremely lucrative way to build wealth from real estate.

If you want to get the inside scoop on how to start and run your own land investing business, come and check out the REtipster Club – where we have a full 12-module course, dozens of videos, bonuses, downloads, group coaching sessions and a members-only forum (where we spend time answering questions every week). There is no better place to learn this business from the inside out!

About the author

Seth Williams is a land investor and residential income property owner, with hundreds of closed transactions and nearly a decade of experience in the commercial real estate banking industry. He is also the Founder of REtipster.com - a real estate investing blog that offers real world guidance for part-time real estate investors.

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  1. Jason says:

    Of course, as soon as I have a chance to utilize this, they remove the “Download All” option

    1. Seth Williams says:

      Hi Jason – are you sure about that? I just checked the site and it’s still showing up for me.

      Take another look and I think you’ll see it there.

      1. Jason Pachomski says:

        Soooo weird. It comes up for some searches but not for others. Do a search for 95423 (Clearlake Oaks, CA). Totally doesn’t show up. Did another search for 91406 (Van Nuys, CA) and it shows up.
        One other thing kinda frustrating about Redfin is their coverage area. A lot of the more rural areas aren’t available.
        That being said though thanks for this excel sheet layout! Another great tool.

        1. Seth Williams says:

          Oh really?? How odd – I just did a search for Clearlake Oaks, CA and I see what you’re talking about now. That’s very strange. I’m not sure why this option would go away in certain areas and be available in others (seems like if the data was available to report at all, it would just as well be available to download as a CSV file).

          In the areas where Redfin doesn’t work, I suppose you could just as well use Zillow and see what they have available.

  2. Gabe Kempf says:

    Great stuff Seth!
    The Download all is still there. (TX at least)
    ***You can only download 499 properties at a time***
    1) Zoom in and out on the map, It will then update the search and tell you how many properties are listed.
    2) Go to bottom of screen and click “Download All”
    3) Follow Seth’s filtering instructions
    4) SUCCESS!

    1. Seth Williams says:

      Awesome! Thanks for the positive report Gabe! Glad it’s working in TX. 🙂

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