The valuation of residential land primarily involves the determination of value for homesites, because comparatively little value is found in excess land that would not constitute a separate homesite.

The method of valuation which most easily produces uniformity is a square foot or per acre calculation based upon the market comparison approach and/or the allocation approach. The front foot method may be acceptable for certain types of residential properties, such as waterfront, but market data should be closely scrutinized to determine if the square foot method can be utilized.

Normally, the land residual technique should be employed only as a check of the valuation derived by market comparison or the allocation approach. After a "homesite" value has been determined within an area, individual lot calculations should begin with the establishment of a "prime land" improved value rate. This rate is to be uniformly applied to the designated "prime land area" which should be based upon the size of the smallest usable lot in the area, with consideration given to local zoning ordinances.

The valuation of excess land, which is the amount of land that exceeds the amount needed for the homesite, but which does not constitute a separate homesite, should be understood to add nominal additional value and should be uniformly treated within the area by the use of lower rates.

Allowances should be made, or factors applied, to recognize the appropriate difference in value between fully developed lots and lots at a lesser stage of development, or to recognize conditions such as poor topography, flooding, etc., if in fact, the local market indicates that adjustments are required. The procedure can be applied equally to small lots on a square foot basis or to large lots on a per acre basis. Whereas the "prime" acre or acres, depending upon local zoning, should be calculated at a prime rate, the remaining acreage should be grouped in accordance with size increments, and calculated at lower rates.

It is important to correlate the square foot rates within an area with the per acre rates in the same area to achieve comparability among various sized parcels. An example of rate correlation is attached.

However it is acceptable to flat-rate townhouse subdivision lots of the same basic size and value.

Attachment: 1

​