Property Valuation
What is 'cost of development' approach to land valuation in Delaware?
ACalculating the cost of all past development improvements to a property
BEstimating land value by determining what a developer can afford to pay based on projected revenues from development minus all development costs and required profit — working backward to land value✓ Correct
CUsing the county's cost of assessment as the basis for market value
DValuing land based on the cost of public infrastructure serving the site
Explanation
The cost of development (land development) approach is used to value raw or partially improved land being considered for development. It starts with projected sales revenue from the completed development, subtracts all development costs (land improvement, construction, soft costs, financing, developer profit) to arrive at the maximum supportable land value. This method is used for feasibility analysis and land acquisition decisions in Delaware.
Related Delaware Property Valuation Questions
- A Delaware property is assessed at $180,000 with an assessment ratio of 60% of market value. What is the estimated market value?
- What is the 'principle of balance' in Delaware real estate value theory?
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- The principle of conformity states that property values are maximized when:
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- A property's land-to-building value ratio is important in the cost approach because:
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