REE-4103 Lecture Notes - Lecture 17: Sales Comparison Approach, Capitalization Rate, Fee Simple
9 Feb 2018
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Document Summary
Land and site valuation: land and site value estimates are important not just in the appraisal of vacant land, but also whenever a separation of land and building value is necessary for improved properties. Reasons for a separate land valuation: cost approach- a separate site value must be distinguished from the cost of the improvements, assessment and taxation, condemnation appraisals. Methods of site valuation: sales comparison method, allocation method, extraction method, subdivision development method, ground rent capitalization method, land residual method. Sales comparison method: the sales comparison approach is the most reliable method of site valuation, sales of similar vacant sites are analyzed and compared. After adjustments are made, the appraiser arrives at an estimate of value for the subject site. Extraction method: an estimate of the depreciated cost of the improvements is deducted from the total sale price of the property to arrive at the land value.
