Property Valuation
Which statement about land value in South Dakota is TRUE?
ALand depreciates like buildings do
BLand is not depreciated for appraisal purposes but buildings are✓ Correct
CLand value is always the same percentage of total property value
DLand and buildings both depreciate under the cost approach
Explanation
In real property appraisal, land is considered indestructible and non-depreciable. Only the improvements (buildings) are subject to depreciation in the cost approach.
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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.
DepreciationA reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Math Concepts
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