Mastering Vacant Land Pricing

How to Set the Right Listing Price and Avoid Costly Mistakes in an Uncertain Market

By MICHAEL EDLEN | Special to the Palisadian-Post

Pricing Land in An Uncertain Market

With more than 160 vacant lots currently for sale in Pacific Palisades, setting the right price has become more critical than ever. Since January 7, only 30 lots have sold and about 22 are in escrow as of April 28. At this pace, it would take more than 19 months to sell the current inventory.

Many property owners are beginning to realize that it may not be possible to achieve the prices they had initially hoped for. About 25% of sellers have already lowered their asking prices, and 20% of the sold lots underwent price reductions before finding a buyer.

One common mistake is pricing based on other active listings, many of which may themselves be overpriced for today’s market. While setting an asking price higher than comparable listings can sometimes be effective in a strong seller’s market, it carries significant risks when inventory levels are rising and buyers have more options.

Key Factors to Consider

When determining a listing price, it is important to weigh several factors carefully:

• Location within the community
• Size of the lot
• Size of the prior home
• Buildable area and topography
• Quality of any views
• Available alternative lots buyers will compare with
• How quickly the owner would like—or needs—to sell

It is also essential to account for any other elements that could impact desirability, such as access difficulty, traffic noise or unusual lot shape.

How to Set Listing Price on Vacant Land

In a more typical market, the time-tested method of determining an optimal listing price is a detailed analysis of the most comparable properties that have recently sold. Ideally, there would be enough recent sales of similar lots within close proximity to guide valuation.

However, in today’s environment, the community’s 30 recent lot sales have been widely dispersed, with no single area having more than a handful of transactions. As a result, direct comparisons are often unreliable without adjusting for key variables like location, lot size and view quality.

Some agents are maintaining close communication with others who have lots currently in escrow. This enables them to anticipate upcoming comparable sales, providing better insight into the latest market trends beyond the closed sales already on record.

Other Key Considerations

• City-permitted square footage: It is crucial to find out the size of the burned structure previously permitted on the site. In many cases, a lot where a larger home existed enables faster approval for rebuilding—a major advantage for buyers.
• Buildable potential: Evaluating whether it would be practical and cost effective to build up to 110% of the prior structure’s size can influence a lot’s desirability and thus its market value.
• Inventory analysis: With a surplus of lots on the market, studying active listings becomes another important tool. Factors such as days on market, how many relatively similar lots are available and any special issues affecting unsold properties should all be part of a thoughtful pricing strategy.

Avoiding Mistakes in An Uncertain Market

Several common mistakes are being made today in setting prices for vacant lots. Among them are:

• Relying on online evaluation systems like Zillow: These automated systems often base their estimates on the previous structure’s value—an obviously irrelevant metric when a lot is now vacant. Some even disclaim that their valuations may be unreliable due to the wildfire damage in the area.
• Using overly broad averages: Some sellers assume that multiplying their lot size by the $322 per square foot average of recent sales is sufficient. However, sale prices have ranged from $119 to $520 per square foot—even within specific neighborhoods like the Huntington, where some lots have commanded nearly $100 per foot higher than others.
• Anchoring to unrealistic listing prices: Looking at one or two other lots priced optimistically can mislead sellers into setting uncompetitive prices. A quarter of the current active listings have already undergone price reductions in an attempt to attract buyers.
• Using outdated valuations: The highest value per square foot was achieved within the first month after the fire. Since then, there has been a noticeable softening in the market. Pricing based on the early post-fire optimism may now be significantly out of touch with buyer expectations.

Choosing an effective pricing strategy is critical. About half of the lots that sold so far did so at or above the asking price—a clear indicator that well-positioned properties are still commanding strong interest. By contrast, many that started at unrealistic price points have struggled and required reductions.

As the market continues to evolve, sellers who remain flexible, realistic and well informed will be in the best position to achieve optimal results.

Our team is dedicated to helping property owners navigate these challenges thoughtfully and strategically, ensuring that each lot is positioned to attract the best possible buyer interest.

The Edlen Team has been monitoring the local market at least twice every day since early January and consults with dozens of fire victims weekly to help them realize the best path forward. They have distributed dozens of newsletters with current information about the post-fire issues and resources. They can be reached at team@edlenteam.com or 310-600-7422.