Allocation Method
A land valuation technique that estimates land value by applying the typical ratio of land value to total property value observed in the market. If land is typically 25% of total value and the property is worth $400,000, land value is approximately $100,000.
The allocation method is derived from analysis of improved sales where land value can be reliably separated from improvement value. The appraiser examines the typical land-to-total-value ratio for comparable properties in the area. This method is most useful when vacant land sales are scarce (common in built-out suburban areas) and provides a check on other land valuation methods. It is less precise than direct comparison of vacant land sales because the ratio can vary significantly based on improvement type, age, and condition.
Related Terms
Land Value
The market value of a parcel of land as if vacant and available for development to its highest and best use.
Extraction Method
A land valuation technique that estimates land value by subtracting the depreciated cost of improvements from the total sale price of an improved property.
Site Value
The market value of the land as if vacant and available for development to its highest and best use.
Cost Approach
A valuation method that estimates value by calculating the cost to reproduce or replace the improvements, subtracting accrued depreciation, and adding the land value.
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A land valuation method that estimates land value by capitalizing the net income remaining after deducting the return attributable to the improvements from the property's total net operating income..
Ground Rent Capitalization
A land valuation method that estimates land value by capitalizing the ground rent (the rent paid for the use of land only, without improvements) at an appropriate capitalization rate..
Plottage
The increase in value that results from combining two or more adjacent parcels into a single, larger parcel.
Assemblage
The process of combining two or more adjacent parcels of land into a single ownership for a unified use.