Abstraction Method |
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Abstraction Method |
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The abstraction method (also called the extraction method) uses comparable sales to estimate the value of the land by subtracting the building value from the total sale price. The procedure is:
•Estimate the depreciated value of the improvements of known sales or the subject by the cost approach
•The sale price minus the depreciated value of the improvements minus the "as is" site improvements is the site value
Example:
A house sells at market value for $150,000. Using Marshall and Swift cost tables and the age/life method of depreciation, it is determined that the depreciated cost of the house is $120,000. The rest of the value ($30,000) is attributed to the land.
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