What technique is employed when the value of a building is known, but the land value is yet to be determined?

The technique utilized when the value of a building is known, but the land value is yet to be determined is the land residual technique. This approach is particularly effective in situations where income generation from the property is a consideration. By determining the net income that the property generates, one can subtract the costs associated with the building to arrive at the residual value, which gives insight into the value of the land.

This technique is beneficial for appraisers in assessing properties that involve income-producing real estate, as it directly connects the potential earnings of the property to the underlying land value. By isolating the building’s contribution to income, appraisers can thereby ascertain the value of the land itself, making it a valuable method in specific scenarios where land value is not immediately apparent.

The cost approach relies on determining the value of the property based on the cost to replace or reproduce the improvements, which does not address the specific situation in the question. The sales comparison approach looks at comparable properties to determine value and is best when comprehensive data on similar properties exists. The income approach focuses specifically on the income-generating potential of the property without separating the detailed components of land and building income.