What approach calculates land value by investigating the surrounding neighborhood for similar sold properties?

The market approach is a method used to determine land value by analyzing the recent sale prices of similar properties in the same neighborhood. This approach is grounded in the principle of substitution, which states that a property should not be worth more than an equivalent property in the same area. By examining sales data from comparable properties, assessors can derive a value that reflects the current market conditions. The key aspect of this approach is the emphasis on actual market transactions, making it particularly effective in areas where there are sufficient sales of similar properties.

The income approach focuses on the potential income generation from a property, often applied in the appraisal of investment properties. It is less about comparing properties based on sale prices and more about assessing the value based on future income streams.

The cost approach estimates a property’s value based on the cost to replace or reproduce it, minus any depreciation. This method is often useful for new constructions or special-purpose properties but does not primarily consider market data from comparable properties.

Ad Valorem tax is a tax based on the assessed value of real estate and does not pertain to the valuation method itself. It relates more to revenue generation for local governments rather than assessing land value.

Thus, the market approach stands out as the most effective method for calculating land