CS代写 Why value land?

Why value land?
• For mortgage, sale etc
• As part of an improved property
• Requirement under the Rating Valuations Act 1998

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Valuation of Residential Land
• Direct Comparison – Site Value
– Area Method
– Unit Metre
• Residual
• Allocation
• Income Capitalisation
Which are the most suitable for residential land valuation? Why?
Direct Comparison Methods
• Sales of similar vacant parcels are analysed, compared and adjusted to derive value of a subject property
• Units of comparison will depend on the nature of the subject property
– Unit metre – Density
Site Value
• Simplest method: uses experience and judgment
• Used where more technical methods inappropriate
• Useful check method
• Limitations: no unit of comparison
Area Method
• Relatively simple
• Widely used
• Unit of comparison approach
• Sales analysed to square metre or per hectare rate
• Rate then adjusted for site variables
• Adopt adjusted rate and apply to subject
Unit Metre
• Technical approach
• Used where uniformity and consistency are paramount
• Unit of comparison approach
• Frontage and depth the main determinants of value
• Depth tables used to derive street unit metre
• Adjustments required for other site variables

Unit Metre
• A parcel of land having one metre frontage to a street and a defined standard depth perpendicular to the frontage
• Variations from the standard depth are adjusted for by the use of a depth table
Depth Tables
• Rank the relationship between value and depth
• Unit metre standard depth is taken to be 100%
• Site depth above or below the standard depth are expressed as a percentage of the 100% standard depth
Depth Table Principles
• The deeper the site the greater its value
• Value increases with depth but at a declining rate
• The front of the site has greater value than the rear
• The deeper the site the less the value of the rear
Value = Unit metre rate * effective frontage * depth% +/- other adjustments
Street Units derived by: Sale Price
Effective frontage*depth%

Use of Street Units
• Should not be thought as applying to an entire street
• In commercial/industrial locations street units may vary within a short distance
• Unit metre method may not be appropriate for extremely irregular shape or steep contour sites
Density Method
• Uses measure of physical density and land use allowed under Territorial Authority bulk and location controls
• Density controls vary with site size, frontages, types of uses etc.
• Potential application – high rise. $ per floor, $ per unit (under highest & best use)
• Requires considerable research and understanding of planning controls
• The valuation of land by applying a dollar rate to the development unit
• E.g. Four residential units @ $60,000 per unit (land value)
• Unit rate is analysed from sales data
• Resource Management Act has made it difficult to specify how many units are permitted on a site.
Direct Comparison Approach
An introduction to the sales approach for the valuation of a residential section
Requires understanding of the market and current market conditions
 changes in supply and demand
 good and bad saleability characteristics  zoning changes
 The sales approach has been called ‘the most acceptable path to market value”
The Method
 a subject property is compared with a group of similar properties, which are then adjusted to bring them as closely in line with the subject as possible
Comparable 1 superior –
Comparable 2
inferior +

Substitution Principle
 the approach is based on the substitution principle
 where there have been recent, comparable sales in the same area at about the same time it is an accurate estimate of market value
 the willing buyer/ willing seller concept applies
Weaknesses
• Unreliable when there are few comparables or they are not in the same location
• Details about the comparable sales need to be accurate and this is not always possible
• Often pure judgment, opinion & experience comes in especially when considering the influence of time within rapidly changing markets
 The Court usually places most weight on the sales comparison method, with at least one other method to back it up
Possible influences on value between comparable properties
lot 1 lot 2 lot 3 lot 4
What is the price of lot 3?
What sorts of things will affect the price?
$75,000 ? ?
Steps to Sales Comparison Approach – 7 Defined Steps
search for initial data on subject property inspect subject property
search for sales & other data from authoritative sources
select comparable sales
analyse the sales
compare with subject property
estimate the value of the subject property
adjustments need to be made in terms of:
 Physical features
 Location
 Availability of services
 Other legal considerations
 Externalities
 Improvements

 Knowledge of the market, experience and judgment will be the basis for making time adjustments
 We may be able to use the relationship between RV and sale prices.
 Will this be accurate?
Section Size
Can relate this to the price per metre squared extracted from section sales
Consider the utility a section provides to the homeowner
Other Physical Features
Situation (corner or rear site)
Location, Services and Zoning
Adjustments for locality will be knowledge based
Water, sewerage, gas, electricity,
telephone Externalities
In what circumstances will zoning be important?
• Influences are dependent on type of residential use i.e. low/medium/high cost, multi unit
• Theoretical basis of valuation is as a vacant site, and therefore capable of being used to highest and best use
Other improvements
Based on depreciated cost or
Added Value

Residual Method
• Estimate depreciated replacement cost of improvements
• Deduct from total sale price
• Derive land value
Applicable if improvements have low value in comparison to land value
e.g. rural land
Allocation Method
• Apply typical ratio of land value to current market value of improved property to determine land value
• Use as check method only
Income Capitalisation
• Ground rent capitalisation
– Market derived capitalisation rates
• Yield capitalisation – Discounted cash flow analysis
– Useful for land that has subdivision potential

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