Land Residual Technique


Definition of "Land residual technique"

Paige D Blair
Paige D Blair Berkshire- Hathaway HomeServices PenFed Realty

Technique used to estimate how the value of a parcel of land will affect its ability to support a given commercial improvement leaving sufficient residual net income to maintain adequate profitability. The commercial value of the land must exceed its purchase price in order for there to be sufficient residual income. Capital land valuation is determined by capitalizing the residual net income. Property tax appraisals and condemnation awards normally require the land residual technique. Unimproved land values are determined through this technique and the value of the improvements are added to establish a total improved land value. In computing land residual value, an appraiser values structural improvements at their cost. Costs associated with the building are deducted from net income. The remaining value is residual the land.

Have a question or comment? We're here to help.

 
 
 
*** Your email address will remain confidential.
 
 

Search Real Estate Terms

Popular Real Estate Terms

Popular Real Estate FAQ