A method of valuing land that subtracts the depreciated value of the improvement from the sale price is known as what?

The method of valuing land that involves subtracting the depreciated value of improvements from the sale price is known as abstraction. This approach is primarily used to determine the value of land by isolating it from any improvements that have been made. The sales price of the property reflects not just the land, but also the structures built on it, which can depreciate over time. By taking the depreciated value of these improvements away from the overall sale price, the appraiser can effectively determine the land's value.

The abstraction method is particularly valuable in markets where comparable land sales provide insight into land values independent of improvements. It's a useful technique in real estate appraisal because it helps to isolate the land's intrinsic value, providing a clearer picture of its worth without the influence of any aging buildings or structures.

Other approaches, like the comparison method, rely on similar properties to estimate value, while the cost approach appraises property based on the cost to replace improvements. The income approach focuses on the income-generating potential of the property rather than strictly isolating the land value. Each of these other methods serves different appraisal purposes and contexts, but abstraction specifically focuses on delineating the value of land from its improvements.