How does an appraiser determine site value when using the cost approach method?

When determining site value using the cost approach method, the appraiser relies on the sales comparison method. This approach involves analyzing recent sales data of similar properties in the same area to establish the market value of the land. The rationale behind this is that the value of the site can be reliably assessed by comparing it to other comparable sites that have recently sold. By looking at these comparable sales, the appraiser can identify trends and values that accurately reflect the current real estate market conditions, which helps in establishing an appropriate value for the site.

While other methods such as looking at previous appraisals, taking a percentage of the seller's asking price, or simply subtracting the value of improvements might provide some context or information, they do not directly assess the site value in a methodical and market-oriented manner like the sales comparison approach does. This makes the sales comparison method the most suitable choice for determining site value in the context of the cost approach.