1. Site Valuation Appraiser can estimate value of: Vacant land Vacant land Unimproved land Vacant site Vacant site Land that has been improved by addition of utilities and is suitable for building

2. Why Do a Separate Site Valuation? Cost approach Cost approach Assessments and taxation Assessments and taxation Condemnation appraisals Condemnation appraisals Income capitalization approach Income capitalization approach Highest and best use study Highest and best use study

3. Highest and Best Use 1. Physically possible Limited by site’s size, shape, topography 2. Legally permitted Zoning, building codes, hazardous areas, CC&Rs 3. Economically feasible Present or anticipated market conditions 4. Maximally productive Highest financial return and property price

4. Vacant land, or land treated as if vacant, if already improved Vacant land, or land treated as if vacant, if already improved Land treated as improved, but with changed use Land treated as improved, but with changed use Example: Warehouse converted to loft apartments Interim use Interim use Consideration of present use in light of anticipated property use due to change in market conditions, etc. As Improved, i.e., current improvements are site’s highest and best use. As Improved, i.e., current improvements are site’s highest and best use.

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

6. Environmental Concerns Toxic substances Toxic substances Air, water, ground, structures Endangered species Endangered species Wetlands Wetlands Brownfields Brownfields Abandoned or underutilized property that may or may not be contaminated Information on regional offices of EPA: 202-260-1223 epa.gov/swerosps/bf

7. Methods of Site Valuation Sales comparison method 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 (extraction method) Allocation method (extraction method) Cost of improvements subtracted from sales price of property to find value of site alone

8. Subdivision development method Subdivision development method or Land development method Requires forecast absorption and projected gross sales Developer’s profit is also called entrepreneurial profit

9. Ground rent capitalization method Ground rent capitalization method Annual income from ground lease is divided by capitalization rate to indicate market value of site Land residual method Land residual method Net income earned by building is deducted from total income to derive net income for land and net income for land is divided by capitalization rate to derive land value