chapter 3 site valuation by other methods Flashcards
A method of estimating land value in which the depreciated cost of the improvements on an improved property is calculated and deducted from the total sale price to arrive at an estimated sale price for the land.
extraction
Improved sales in rural areas are frequently valued by the
extraction method
because the building improvements may have a minimal contributory value in comparison to the underlying land value.
A run-down neighborhood grocery store on a good corner location in a desirable older neighborhood recently sold for $400,000.
The reproduction cost of the improvements today would be $250,000 and the total depreciation is estimated to be 80%.
By extraction, what is the land value?
$50,000
$250,000 x .80 = $200,000. That amount is lost and gone forever. So we subtract the depreciation amount from the cost new $250,000 - $200,000 = $50,000.
OR
$250,000 (cost new) x .20 and arrive directly at the figure of $50,000.
The sale price of the property was $250,000. Your investigation of the Building Department’s records allow you to estimate that the reproduction cost of the improvements would currently be $280,000. After an analysis of the property, you conclude that the total accrued depreciation is 60%. On that basis, what would be your conclusion as to the value of the land?
138,000
$280,000 x .60 (depreciation) = $168,000
$280,000 - $168,000 = $112,000 (contributory value of improvements)
$250,000 (total property value) - $112,000 (contributory value of improvements) = $138,000 (value of land)
A method of estimating land value in which sales of improved properties are analyzed to establish a typical ratio of land value to total property value and this ratio is applied to the property being appraised or the comparable sale being analyzed.
allocation method
The process of valuing a universe of properties as of a given date using standard methodology, employing common data, and allowing for statistical testing. (USPAP, 2016-2017 ed.) Often associated with real estate tax assessment valuation.
mass appraisals
The value of an improved subject property by the sales comparison approach is $450,000. The allocation ratio, as indicated by sales of other properties in the area, indicates that the land-to-total-value ratio is 60%. What is the indicated site value of this property by the allocation method? $160,000 $180,000 $270,000 $360,000
$270,000
A property sold for $375,000. The reproduction cost of the building was $600,000 and its estimated deprecation was 70%. By extraction, what is the value of the land? $110,000 $180,000 $195,000 $240,000
$195,000
A comparable sale recently sold for $340,000. The typical land value to property value ratio in that area is 30:70. By allocation, what is the value of the land in that comparable sale? $70,000 $98,000 $102,000 $238,000
$102,000
$340,000 x .3 = $102,000.
The two methods that have frequent application in both rural and urban areas are the \_\_\_\_\_\_\_\_\_\_\_\_\_ method and the \_\_\_\_\_\_\_\_\_\_\_\_\_ method. Land Residual, Extraction Allocation, Subdivision Development Allocation, Extraction Ground Rent Capitalization, Extraction
Allocation, Extraction
You find a comparable sale that recently sold for $260,000. The typical land value to property value ratio in that area is 35:65. By allocation, what is the value of the land in that comparable sale? $35,000 $65,000 $77,000 $91,000
$91,000
$260,000 x .35 = $91,000
A method of estimating land value in which sales of improved properties are analyzed to establish a typical ratio of land value to total property value and this ratio is applied to the property being appraised or the comparable sale being analyzed is the definition of the \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ method of site valuation. Allocation Land Residual Extraction Subdivision Development
allocation
A method of estimating land value in which the depreciated cost of the improvements on an improved property is calculated and deducted from the total sale price to arrive at an estimated sale price for the land is the definition of the \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ method of site valuation. Allocation Land Residual Extraction Subdivision Development
extraction
A comparable sale recently sold for $300,000. The typical land value to property value ratio in that area is 40:60. By allocation, what is the value of the land in that comparable sale? $120,000 $128,000 $142,000 $180,000
$120,000
A method of estimating land value when subdividing and developing a parcel of land is the highest and best use of that land. When all direct and indirect costs and entrepreneurial incentive are deducted from an estimate of the anticipated gross sales price of the finished lots (or the completed improvements on those lots), the resultant net sales proceeds are then discounted to present value at a market-derived rate over the development and absorption period to indicate the value of the land.
subdivision development method
A method of estimating land value in which the net operating income attributable to the land is isolated and capitalized to produce an indication of the land’s contribution to the total property.
land residual method
