Legal Definitions - improved value

Improved value, in real estate, refers to the total worth of a piece of property, which is determined by combining the market value of the land itself with the market value of any structures or enhancements built upon it. This concept is crucial in property appraisal, as it provides a comprehensive valuation of developed land, reflecting both the inherent value of the ground and the additional worth created by human construction and modifications.

Here are a few examples to illustrate this concept:

• Residential Property Valuation

  Imagine a suburban house situated on a quarter-acre lot. An appraiser determines that the bare land, if vacant, would be worth $150,000. The house itself, along with the attached garage, driveway, landscaping, and fencing, is valued at an additional $400,000. The improved value of this property would be the sum of these two components: $150,000 (land) + $400,000 (improvements) = $550,000. This example clearly shows how the value of the land and the value of the structures on it are added together to arrive at the total improved value.

• Commercial Development Appraisal

  Consider a commercial property in a city center that hosts a multi-story office building. The land on which the building stands, due to its prime location, is appraised at $2,000,000. The office building itself, including its internal systems, finishes, and the parking structure, is valued at $8,000,000. The improved value of this commercial property would be $2,000,000 (land) + $8,000,000 (improvements) = $10,000,000. This demonstrates that for commercial properties, the improved value accounts for both the valuable location and the significant investment in the commercial structure.

• Agricultural Land with Infrastructure

  A large rural parcel of land used for farming includes a barn, a well, and an extensive irrigation system. The raw agricultural land, without any structures, is valued at $700,000. The barn, well, and irrigation system, which are essential for the farm's operation, are collectively valued at $100,000. The improved value of this farm property would be $700,000 (land) + $100,000 (improvements) = $800,000. This illustrates that "improvements" are not limited to residential or commercial buildings but can also include infrastructure and structures vital to other land uses, such as agriculture.