Which method is utilized to estimate land value separately from improvements?

The Allocation Method is specifically designed to estimate land value separately from the improvements made to the property. This method works by determining the total value of a property and then allocating a portion of that value to the land and the remaining to the improvements.

To use the Allocation Method effectively, appraisers typically start with the total value of residential or commercial properties that have sold in the same market area. They identify the sales price of comparable properties and then analyze what fraction of that price is attributable to the land versus the improvements. This allows appraisers to isolate the land value, which is crucial for various real estate analyses, such as assessing development potential, tax purposes, or determining market trends.

The other methods mentioned do not focus exclusively on separating land value from improvements. The Cost Method involves calculating the value of both the land and improvements based on the costs incurred to build and develop them. The Sales Comparison Method assesses the value of a property in comparison to similar properties that have recently sold, without necessarily providing a distinct separation of land and improvement values. The Capitalization Method estimates value based on the income that the property generates, which also does not isolate land value from improvements. Thus, the Allocation Method is the only approach among the options provided that specifically addresses estimating land