Land developers and builders who want to sell you a house or a lot will try to sell as many parcels as possible. Land buyers must spend a lot of time to identify the parcels worth pursuing. They need tools that will help them quickly sort out the garbage and find the parcels they should consider further. For their preliminary screening, buyers usually use formulas or rules of thumb.

These rules of thumb are designed to provide rough estimates relating to the yield of a site and different cost factors because these are the key aspects in calculating the "right" price they should pay for the land. By defining the price at which the numbers work, land buyers can see within minutes if the seller's asking price is realistic. The buyers will simply throw out the parcel if it is overpriced.

Commercial Land Developments

As is to be expected, the methods for estimating site yields and costs of improvements are different for residential and commercial land developments. For office or retail parcels, yield is the total amount of space that can potentially be built. This is usually a factor of the amount of parking space that will fit in the parcel. For example, one rule of hand might be used for estimating the total area of land required to park each vehicle on the property. Another would approximate the amount of land area taken up by sidewalks and walkways. Thirdly, a rule of thumb could assume that vertical and horizontal improvements will cost $100/sq. ft.

Residential Land Developments


The rule of thumb that is applied to residential land development will be to estimate both the cost and number of building parcels the parcel would produce when the subdivision has been completed. The "raw" value of each building lot is calculated using the estimated sale price of the house on the lot and the cost of improvements.

One rule of thumb for site yield might take the gross land area, subtract all the square feet that are wasted or can't be utilized due to whatever reason. Divide the result by minimum lot sizes required by zoning and you will get the number of parcels. The rule of thumb calculation might look something like this, for example, for a vacant 15-acre parcel zoned 20,000 square feet. ft. lots:

Step 1: 43,560 sq. ft. x 15 acres = 653,400 sq. ft.
Step 2: 653,400 sq. ft. x 70% = 457,380 sq. ft.
Step 3: 457,380 sq. ft. divided by 20,000 sq. ft. = 22.87 building lots

In this case, the final result would be rounded to the Dirt Work near me nearest. There are approximately 22 lots available for this parcel. In the second stage, 30% of gross site area is deducted for waste, natural constraints such as slopes, flooding, and irregular shapes, plus land that will be used by new roads.

Remember that rules of thumb can vary by geographic area. Since these are rough estimate, you may need to adjust them according to the circumstances. In this case, if the site is a 15-acre parcel with a significant portion in floodplains, it would be illogical to only deduct 30% of its gross area. You should be conservative when you're not certain what rule-of thumb to use.