In which appraisal approach to value would the value for the land be calculated separately?
Question & Answer
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Capitalization.
Gross rent multiplier.
The gross rent multiplier approach values property based on rental income relative to market rents, without separating land value. It's a quick screening tool but doesn't distinguish between land and building components.
Market comparison.
The market comparison approach values property based on similar recent sales, treating the property as a whole unit. It doesn't separately calculate land value but rather considers the combined value of land and improvements.
Cost.
The cost approach calculates total value by adding land value to depreciated building cost, but doesn't separate land value in the same way as the capitalization approach. Many students confuse this distinction.
Why is this correct?
The cost approach calculates land value separately, then adds building value minus depreciation.
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