Newz: Surplus vs. Excess Land,
Easement Issues and Liability
August 14, 2026
What’s in This Newsletter (In Order, Scroll Down)
- LIA AD: Easements: Issues and Appraiser Liability
- Surplus Land vs. Excess Land: What Appraisers Need to Know, By Kevin Hecht
- Built Different: How the Ranch-Style Home Went from 1930s Architectural Rebel to America’s Favorite Floor Plan
- Let’s Talk About Letters of Engagement, By Jeff Whaley
- MY AD: UAD 3.6 Software Evaluation Checklist
- An Abridged History of the Appraiser Profession, By Kendra Budd, Editor Working RE
- My UAD 3.6 Tips of the Week
- MBA: Mortgage applications increased 3.6 percent from one week earlier
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Surplus Land vs. Excess Land: What Appraisers Need to Know
By Kevin Hecht
Excerpts: Land valuation is a fundamental aspect of real estate appraisal, influencing property transactions, development decisions, and investment strategies. A key part of the process involves distinguishing between the land that supports the property’s current use and any additional land that may or may not have independent value.
Commonly, a square footage adjustment is made based on lot size differences among comparable properties without one key distinction: whether the difference in land is surplus or excess land. This fails to consider whether the extra land has value independent of the subject property.
Surplus land generally does not contribute value beyond its association with the primary parcel, though it may still add some contributory value in certain market conditions. Excess land, by contrast, has value because it can be divided and sold separately.
Understanding this distinction is essential for developing a credible appraisal.
Surplus Land vs. Excess Land at a Glance
Surplus Land – Cannot be separated and sold independently
Excess Land – Can be divided and sold separately
Surplus Land – No independent highest and best use
Excess Land – May have a different highest and best use
Surplus Land – Typically contributes limited additional value
Excess Land – Has independent value and should be analyzed separately
Surplus Land – Remains part of the primary property
Excess Land – Can potentially support separate development
Key Differences Between Surplus and Excess Land
Surplus and excess land apply to commercial and residential properties. Before determining whether land is surplus or excess, appraisers must consider zoning, highest and best use, surrounding properties and their use, property improvements, and supply and demand for the property and any proposed improvements.
Why the Distinction Matters in Appraisal
Choosing the correct land type has an effect on the final value of the property. Excess land adds value to the subject property and creates future potential. Thus, a higher price per square foot should be assigned to excess land over surplus land.
Ultimately, identifying land type is about more than just checking if a property can be split. It’s about understanding the property’s most productive use under current legal and economic conditions.
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My comments: Read this article!! The best comprehensive article I have read on this issue. Understanding Surplus vs. Excess Land is critical in appraising. I have encountered this issue mostly in commercial and agricultural appraisals. It can happen in any type of property.
Unfortunately, residential lender appraisers sometimes encounter this but don’t know much about it. I have appraised it on single family properties. Not understanding what this is of the many ways residential appraisers end up trouble at the state appraisal board because of lack of knowledge and experience.
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