What is 'land residual technique' in Delaware appraisal?
Why A method for estimating land value when building value is known: subtract income attributable to the building from total NOI to find income attributable to land, then capitalize it Is Correct
Answer B: A method for estimating land value when building value is known: subtract income attributable to the building from total NOI to find income attributable to land, then capitalize it
Exam Tip: Property Valuation
Valuation questions focus on the three approaches to value: sales comparison, cost, and income. Know which approach is best for which property type. The income approach uses cap rate and NOI — memorize these formulas.
Key Property Valuation Terms in This Question
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Key Terms to Know
A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
Net Operating Income (NOI)The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
Math Concepts
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