1. 3. Land Values In this module, we will discuss:
Factors that influence land values
Methods used to calculate values

2. Components of Value Scarcity Utility Demand Effective Purchasing Power
For real estate to have value it must be scarce.
Scarcity
Utility
Demand
Effective Purchasing Power
Utility is the power to satisfy a need or want. Utility by itself does not imply value.
Demand is the desire of individuals to want things.
Purchasing power is the actual ability to buy. Unless real estate is affordable to the targeted market, it will not be successful.

3. Principles of Real Property
Anticipation
Balance
Change
Competition
Conformity
Contribution
Substitution
The underlying economic and financial considerations that provide a basis for property analysis in addressing the issue of why one parcel is better than another.

4. Factors That Affect Land Value
Market value
Rent theory
Supply and demand

5. Appraisal Methods
Market Comparison
Cost Approach
Income Approach

6. Market Comparison Advantages Disadvantages
Incorporating previous market participant actions
Easily explained to non-real estate professionals
Active market provides recent sales to use as a comparison.
Disadvantages
Quantity and quality of sales data
Relies on historical transactions and does not look to the future, which could provide outdated information

7. Cost Approach Advantages
Useful in evaluating new or relatively new properties
Used when income data are unknown or not relevant
Disadvantages
It can be difficult to estimate depreciation.
For new buildings, value indicator may be more accurate than for marked economic shifts.

8. Income Approach
Estimates value by converting a string of expected future payments to a present property value, including cash flows, and reversion at the time of the sale in the future
Common ways to analyze income:
Cap rate
IRR
FMRR
GRM

9. Case Study: Sawgrass Ranch
Review the case study.
Determine an appraisal approach for this case.