The Subdivision Development Method is a method of estimating land value when a subdivision and its development are the highest and best use of the parcel.
Steps in the subdivision development method of estimating land
|1.||An estimate of the gross revenues from sale of the proposed subdivision lot is made.|
|2.||The resultant net proceeds of lot sales is discounted to present value using a market derived discount rate.|
|3.||Direct costs, indirect cost, and entrepreneurial incentive are estimated.|
|4.||The resultant costs are discounted to present value using the market derived discount rate.|
|5.||The value of the raw land is the present value of the net proceeds of lot sales raw land.|