How is site (land) value typically established in the cost approach to appraisal?

In the cost approach to appraisal, site or land value is typically established by using the sales comparison approach. This method involves analyzing recent sales of comparable parcels of land in similar locations to determine a baseline value. The rationale behind this approach is that the market provides a clear indicator of value based on what buyers have recently paid for similar land, adjusting for factors such as location, size, and amenities.

This method is particularly effective for establishing land value because it directly reflects current market conditions. By relying on actual sales data, the appraiser can arrive at a value that reflects the demand and pricing trends specific to that area, providing a reliable benchmark for land valuation within the context of the overall property appraisal.