Property Valuation
What is a 'land residual technique' in appraisal and when is it used?
AA. A technique for estimating residential land value based on comparable sales
BB. A technique for estimating land value when the improvement value is known; the land residual is the portion of total property income attributable to the land after accounting for the improvement's return✓ Correct
CC. A method for calculating remaining land value after development costs
DD. A government formula for assessing agricultural land value in Hawaii
Explanation
The land residual technique allocates a portion of property income to improvements based on their value and required return, with the residual income attributed to the land. It is used when improvement value can be estimated but land value is uncertain—often used in highest and best use analysis to test whether a proposed development is economically feasible.
Related Hawaii Property Valuation Questions
- In the income approach, the Gross Rent Multiplier (GRM) is calculated by dividing:
- In Hawaii, the assessed value of a property used for property tax purposes is determined by:
- In Hawaii, what is the 'plottage value' concept?
- The appraisal principle that states 'value is created by the expectation of future benefits' is known as:
- In Hawaii, what is the difference between 'market value' and 'market price'?
- In Hawaii, which appraisal concept holds that value is created by the expectation of future benefits?
- The effective gross income (EGI) of a rental property is calculated as:
- The capitalization rate (cap rate) used in the income approach is calculated as:
Practice More Hawaii Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Hawaii Quiz →