Land Residual Technique

An appraisal technique by which land value is determined by first determining the net return attributable to the building only; and deducting it from the total return to the property (may be estimated); the residual amount is capitalized to find the land value. The building value may be determined by construction costs (new building), depreciated construction costs (if only a few years old), or estimated present construction costs (if an older building).

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