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Which describes extraction as distinct from applying a land-to-total allocation ratio?

Correct Answer

A) Subtracting the depreciated improvement value from an improved sale price

Extraction deducts supported depreciated improvement contribution from a compatible improved-property price. Allocation applies a supported land-to-total value ratio. The approaches differ in their inputs; either can be unreliable if its contribution estimate or market ratio is unsupported.

Answer Options
A
Subtracting the depreciated improvement value from an improved sale price
B
Extraction does not need an estimate of the improvements’ depreciation
C
The allocation method is limited to commercial property types
D
The allocation method requires that sales of vacant land be found nearby

Why This Is the Correct Answer

Extraction deducts supported depreciated improvement contribution from a compatible improved-property price. Allocation applies a supported land-to-total value ratio. The approaches differ in their inputs; either can be unreliable if its contribution estimate or market ratio is unsupported.

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