Which technique is used by appraisers to analyze the income from a property by separating income from land and improvements?

The correct choice is the land residual technique. This method is specifically designed to separate the income generated from land and the income generated from the improvements (such as buildings) on that land. In practice, appraisers use this technique to estimate the value of the land by determining how much income is attributable specifically to the land itself, after accounting for the income produced by the improvements.

This approach is particularly useful in income-producing properties where the land and the developments on it may have different contributions to the overall revenue. By isolating these components, appraisers can provide a clearer understanding of the land’s intrinsic value and the effectiveness of the improvements.

The asset residual technique, while related to income analysis, typically looks at the overall income from a property without breaking it down into land and improvements. The debt service technique focuses on the costs associated with financing a property, analyzing how much of the income is consumed by debt obligations rather than the income itself. The equity valuation technique, on the other hand, assesses the overall ownership interest (equity) in the property, also without explicitly distinguishing between land and improvements in the income analysis.

By using the land residual technique, appraisers gain insights into market conditions and the potential future performance of the property, which are essential for