How is Lake Frontage valued?
A lake property is valued based on 4 primary factors: The first is the primary frontage – this is straight line frontage (not meandering) that is necessary for a build-able lot on the lake the lot is located on. The second factor is the “excess frontage”. Excess frontage is the straight line frontage that cannot be used as a separate build-able lot. The third factor is any improvements (i.e. home, garage, outbuildings). The 4th factor is additional acreage that is above average for the lake the property is located on (i.e. if the average lake parcel is 1.5 acres, a property with 4.5 acres would have extra value in the additional 3 acres over and above the norm for the lake).
One of the myths of lake frontage value is that each foot is worth the same. Market data has consistently shown that value of excess frontage is approximately 40% of the value of primary frontage – this is why township assessors use this formula to apply market and taxable values to lake properties. Here is an example based on $4,500/ foot frontage on Round Lake (that is what exceptional frontage on Round Lake has sold for over the past year). Let’s say there are two new very desirable lake lots for sale on Round Lake. One has 199’ of straight line frontage, the other has 200’. The one with 199’ is valued at $628,200 and the one with ONE EXTRA FOOT is valued at $900,000 – a $271,800 difference for one extra foot of frontage. The reason is that the 200’ lot can be subdivided into two build-able lots (this example assumes this lot has enough square footage to divide it into two lots), and the 199’ lot cannot be divided into two build-able lake lots no matter how many square feet it has. This is information every lake property owner needs to know especially those who are in the process of determining a list price for their lake property and/or those who are looking to purchase new lake property.
Different lakes in our County have different classifications resulting in different minimum lot sizes, required lake front footage, lot line setbacks, etc… – this will be discussed in a future blog entry.
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