9 Site Valuation Vacant land Vacant site Appraiser can estimate value of: Vacant land Raw land with no improvements Vacant site Land that has been improved by addition of utilities and is suitable for building

Reasons for Separate Site Valuation Cost approach Assessments and taxation Condemnation appraisals Income capitalization approach Highest and best use study

Highest and Best Use Physically possible Legally permitted Limited by site’s size, shape, topography Legally permitted Consideration of zoning, building codes, hazardous areas, CC&Rs Financially feasible Present or anticipated market conditions Maximally productive Highest financial return and property price

Highest and Best Use Interim use Consideration of present use in light of anticipated property use due to change in market conditions or development potential (change of zoning) Vacant land, or treated as if vacant, if already improved Land treated as improved, but with changed use, such as a warehouse converted to loft apartments

Site Data Identification Analysis Highest and best use Physical features Size, location, utilities, improvements, soil composition, flood/earthquake zone Zoning Easements, rights-of-way, CC&Rs

Environmental Concerns Federal regulations cover Water Air Toxic substances Endangered species Wetlands Commercial real estate may require Environmental site assessment (ESA) or Environmental property assessment (EPA)

Environmental Concerns Brownfields Abandoned or underutilized property that may or may not be contaminated Properties require environmental assessment, cleanup, and redevelopment Information on Brownfields Federal Partnership Action Agenda can be obtained from EPA epa.gov/brownfields

Methods of Site Valuation Sales comparison method Sales of similar vacant sites are analyzed and compared, with adjustments to sales prices resulting in estimate of value of subject site Allocation method Ratio of land value to building value typical of area is applied to total value of subject property to derive land value of subject

Methods of Site Valuation (cont.) Abstraction method (extraction method) Cost of all improvements is subtracted from sales price of property to find land value Subdivision development method Costs of developing and subdividing parcel of land are subtracted from total expected sales prices of the separate sites to determine the value of the undivided raw land

Methods of Site Valuation (cont.) Ground rent capitalization method Annual income from ground lease is divided by capitalization rate to indicate market value of site Land residual method Net income earned by the building is deducted from total income to derive net income from land and net income from land is divided by capitalization rate to derive land value