Pre-requisite: Recommend BUSI 330, BUSI 331, and BUSI 121.
These two lessons are intended to introduce appraisal theory as it pertains to the valuation of land, with a focus on case studies and practical applications. Lesson 1 reviews the economic principles important in land valuation, and covers the comparison-based methods for valuing land (including direct comparison, extraction, and allocation). Lesson 2 reviews the three income-based techniques for land valuation: ground rent capitalization, land residual, and subdivision analysis.
Course Outline
Lesson 1 - Comparison-Based Methods of Land Valuation
After completing this lesson, students should be able to:
- Explain methods for measuring and comparing different parcels of land
- Analyze and interpret situations to determine the most appropriate method of valuing land
- Demonstrate the theory and practical application of direct comparison, extraction, and allocation land valuation techniques
- Evaluate the need for adjustments for comparables and analyze market data to support appropriate adjustments, to account for differences in attributes such as depth, size, irregularities, corner lots, and locations
- Describe the methods used to value land where there are insufficient sales of comparable sites
- Discuss increasing and decreasing returns to scale, including size curves and acreage adjustments
Lesson 2 - Income-Based Methods of Land Valuation
After completing this lesson, students should be able to:
- Demonstrate the practical application of:
- direct capitalization: ground rent capitalization technique
- direct capitalization: land residual technique
- yield capitalization: subdivision development analysis technique
- Explain the theory applicable to these three income-based techniques
- Recognize situations requiring selection of one or more of the three techniques
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