Property Valuation
What is 'excess land' versus 'surplus land' in real estate appraisal?
AThey are interchangeable terms describing land larger than needed
BExcess land is land that could be sold separately without affecting the value or use of the main parcel; surplus land cannot be separated or sold independently✓ Correct
CSurplus land generates additional income; excess land has no value
DExcess land is in residential zones; surplus land is in commercial zones
Explanation
Excess land is land that exceeds what is needed for the current use AND can be sold or developed separately without affecting the main parcel. Surplus land also exceeds what is needed but cannot be separated and has no independent utility.
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Key Terms to Know
Appraisal
A 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.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
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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