Land Value
The market value of a parcel of land as if vacant and available for development to its highest and best use. Land value is a critical component of the cost approach and does not depreciate.
Land value must be estimated separately from improvement value in the cost approach. Common methods include direct comparison of vacant land sales, allocation (extracting the typical land-to-value ratio from improved sales), extraction (subtracting depreciated improvement value from the total sale price), and land residual analysis. Factors affecting land value include location, size, shape, topography, zoning, access, utilities, flood zone status, environmental conditions, and proximity to amenities or negative influences.
Related Terms
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.
Highest and Best Use
HBUThe reasonably probable use of a property that results in the highest value, considering uses that are legally permissible, physically possible, financially feasible, and maximally productive..
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.
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.
More in Property Characteristics
View allGross Living Area (GLA)
GLAThe total finished, above-grade living area of a residential property, measured in square feet.
Gross Building Area (GBA)
GBAThe total area of a building measured from the exterior walls, including all finished and unfinished, above-grade and below-grade spaces.
Below-Grade Area
Any portion of a building that is below the ground level on any side.
ANSI Z765 Measurement Standards
ANSIThe American National Standards Institute standard for measuring residential floor area.