Part 2 Land Value Opinion Flashcards
The term land commonly refers to _____
either unimproved or improved land
both
Of the three approaches to value, only the ______ approach requires a separate land value estimate.
Cost approach
What are the six different procedures used in developing opinions of land or site value.
GLADES
Ground rent capitalization Land residual Allocation Development (subdivision Extraction Sales comparison
______ land is typically considered to be raw land that may have development potential.
Unimproved land
______ is considered as being prepared for development by grading, draining, installing streets and utilites, ect.
Improved
The term ____ commonly refers to improved land that does not require further land development or subdivision. It is ready for property improvements suited to its highest and best use.
Site
_________ is based on improved sales, and the depreciated cost of the improvements is subtracted from the sales price.
extraction
The appraiser extracts the value of the land from the total value.
______ also uses sales of improved properties. Allocation is based on a ratio of land value to improved property value.
Allocation
Sale price x typical ratio of land value to improvement value= Land value
_____ can be used to establish land value when the number of vacant land sales is inadequate.
Allocation
_________ is an income approach based on the economic principle of surplus productivity. As the other three agents of production have been paid, land as the residual receives income, which is capitalized into land value
Land residual technique
In this procedure, the appraiser separates the rent between the improved land and building improvements.
Land residual technique. In the LRT, the appraiser converts the net income to the improved land only through the capitalization process to develop a value for the land
When vacant sales are unavailable, the appraiser can analyze improved property sales similar to the subject property in relevant land characteristics.
Extraction
This procedure is most applicable when improvements can be reliably valued, such as when the improvements are wither new or very old (that is, nearing the point when the improvements will be demolished)
Extraction
This procedure can be used when the improved land rent is a known amount, as in an improved land lease.
Ground rent capitalization
In this procedure, the appraiser divides the net amount estimated for the right to use and occupy the improved land by a land capitalization rate (derived from the market) to form an opinion of improved land
Ground rent capitalization
Land Rent
__________ = Land Value
Capitalization Rate
This procedure requires the appraiser to separate the rent between the improved land and the building improvements
Land residual technique
__________ is also an income approach to the valuation of tracts of unimproved land with subdivision potential.
Subdivision development
The _____ approach is a summation approach to value.
Cost approach
In this approach, the value of the sit is first estimated, then the value contribution of the building and site improvements are added to indicate the value of the overall property.
Cost approach.
The _____ approach measures the present value of the future benefits derived from property ownership, such as collecting future rent payments and eventual resale of the property in the future. It is based on the conversion of the income-producing capability of a property into value through he capitalization process.
Income approach
______ is the process of resolving the differences among the various value indications and arriving at a final opinion of value.
Reconciliation
The value opinion can be a single dollar figure or a range into which the value will most likely fall.
In ______, you explain what made you arrive at the value based on sales comparison.
reconciliation
The land residual technique is primarily used on which of the following?
Income properties
This land valuation technique requires the appraiser to separate the rental income between the land and the improvements.
When would the extraction method of land valuation be most applicable?
When the value of the improvements cab be reliably estimated.
Ideally, the extraction method is best when the improvements are either new or very old.
While appraising an income property, an appraiser separates the rent between the land and the improvements and then converts the net income of the land into a value opinion. Which land valuation technique is the appraiser using?
land residual
Accurate statments regarding the reconciliation process include?
Reconciliation logically leads the reader of the appraisal report to a final opinion of value.
Reconciliation occurs throughout the valuation process
Reconciliation is a disciplined process using reason and judgement.
THERE IS NO MATHEMATICAL FORMULA FOR THE RECONCILATION PROCESS.
Which approach to value requires a separate valuation of the site?
Cost approach
The cost approach is the only analytical procedure that includes a separate valuation of the site as though vacant and available to be put to its highest and best use.
In the sales comparison approach, when an appraiser makes adjustments, what is the appraiser adjusting?
the comparable sales
During reconciliation, the appraiser may develop an opinion of value that is:
not derived through mathematical process
a single dollar amount
within a range of values
The three approaches to value are the cost approach, the sales comparison approach, and the income cap approach. Which of the following is a true statement regarding the application of these approaches to value?
The appraiser may apply more than one approach, which will likely result in differing value indications that will need to be reconciled by the appraiser.
When an appraiser resolves differences among several value indications, what is this called?
reconciliation
The allocation method of site valuation is based on which of the following?
a ratio of the value of the land to the value of the property.
When does reconciliation take place?
throughout the valuation process
If an appraiser uses a known rent amount for land and divides the rent by a land capitalization rate to form an opinion of value, which land valuation techniques is the appraiser using?
Ground rent capitalization
What is the first step in the cost approach?
estimate the value of the land
What are the three traditional approaches to value?
cost,
sales comparison
income capitalization
Elements of comparison
a. Real property rights conveyed
b. Financing terms (compared to cash equivalency)
c. Conditions of sale (consider motivation)
d. Expenditures made immediately after purchase
e. Market conditions (commonly known as a “time” adjustment)
f. Location
g. Physical characteristics (including energy-efficient, high-performance, and
green features)
h. Economic characteristics
i. Use (based on comparable zoning, highest and best use, and utility)
j. Non-realty components of value (for example, personality, leased solar
photovoltaic systems, business value, franchises, and trademarks)
In a land valuation assignment, an appraiser subtracts the depreciated cost of the improvements from the sale price to obtain the value of the land. Which land valuation technique is the appraiser using?
extraction
Non-realty components of value are an element of comparison considered within the sales comparison approach.
True
for example, personality, leased solar systems, business value, franchises, trademarks
