What is a common method used to estimate the value of raw land?

The sales comparison approach is commonly used to estimate the value of raw land because it relies on the principle of substitution, which posits that a buyer will not pay more for a property than the price of an equivalent property. In this approach, appraisers analyze sales data for comparable parcels of raw land that have recently sold under similar market conditions.

By assessing the sale prices of these comparables, appraisers can make adjustments for differences in size, location, topography, zoning, and other relevant factors. This method is particularly well-suited for raw land because each parcel can significantly vary in its characteristics and uses, making past transactions of comparable properties a crucial basis for estimation.

The other methods, while valuable in different contexts, are less applicable to raw land. The income capitalization approach is generally used for income-producing properties rather than raw land, as it evaluates potential income generation. The cost approach is more relevant for properties with improvements because it focuses on calculating the cost to replace or reproduce the property. Finally, the reconciliation method is a process by which various value indications from different approaches are weighed and averaged, rather than a standalone method for value estimation.

Thus, the sales comparison approach stands out as the most practical and widely accepted method for determining the