Which of the following is NOT a method of land valuation?

Which of the following is NOT a method of land valuation?

• A. Direct sales comparison
• B. Income capitalization
• C. Abstraction
• D. Allocation

Answer: (B)

Income capitalization is indeed a recognized method of land valuation, used primarily in scenarios where an income-producing property is being appraised. This approach estimates the value of the property based on the income it generates, often factoring in potential future income and operational expenses to determine its present value. The other methods listed—direct sales comparison, abstraction, and allocation—are also valid techniques used in land valuation. The direct sales comparison method involves looking at recent sales of comparable properties to determine market value. Abstraction is the process of deriving value by considering intrinsic characteristics and how they relate to the market. Allocation involves distributing the total property value among its various components, such as land and improvements. Given that income capitalization is a well-established method for valuing properties, the assertion that it is not a method of land valuation is incorrect. Further clarification of the context surrounding land valuation methods would help reinforce the understanding of how each technique functions within the broader framework of real estate appraisal.

Income capitalization is indeed a recognized method of land valuation, used primarily in scenarios where an income-producing property is being appraised. This approach estimates the value of the property based on the income it generates, often factoring in potential future income and operational expenses to determine its present value.

The other methods listed—direct sales comparison, abstraction, and allocation—are also valid techniques used in land valuation. The direct sales comparison method involves looking at recent sales of comparable properties to determine market value. Abstraction is the process of deriving value by considering intrinsic characteristics and how they relate to the market. Allocation involves distributing the total property value among its various components, such as land and improvements.

Given that income capitalization is a well-established method for valuing properties, the assertion that it is not a method of land valuation is incorrect. Further clarification of the context surrounding land valuation methods would help reinforce the understanding of how each technique functions within the broader framework of real estate appraisal.