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. Value of Land = Sale Price - Depreciated Improvement Value.
The extraction method works backward from improved sales to isolate the land component. The appraiser selects comparable improved sales, estimates the depreciated cost of each property's improvements (reproduction or replacement cost minus depreciation), and subtracts this from the sale price. The remainder is the indicated land value. This method requires accurate cost and depreciation estimates, making it most reliable for newer properties where depreciation estimates are more certain. It is particularly useful in areas without vacant land sales.
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.
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.
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.
Depreciation
A loss in value from any cause.
Site Value
The market value of the land as if vacant and available for development to its highest and best use.
More in Land & Site Valuation
View allLand Residual Technique
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.