Which valuation technique is used when the land value is known, but the building value is unknown?

The building residual technique is appropriate when the land value is known, but the value of the building itself is uncertain. This method is particularly useful in situations where the land has a well-established value in the market, allowing an appraiser to focus on determining the contribution of the building to the overall value.

In the building residual approach, the appraiser starts with the market value of the property and deducts the known land value from it. The result is the residual value, which represents the value attributed to the building. This approach is beneficial when there is high certainty about the land value, providing a clear framework to ascertain the building's contribution to the overall property value.

The cost approach, while relevant in some contexts, generally involves estimating the costs to replace the building and adding the land value, which does not specifically focus on the scenario presented. The sales comparison method analyzes similar properties' sales rather than isolating land value directly, and the income approach relies heavily on potential income generation rather than separating land and building values. Therefore, the building residual approach is the most suitable valuation technique for the scenario in which only the land value is known.