In the market extraction method, what is the first step regarding comparable properties?

In the market extraction method, the first step regarding comparable properties involves subtracting the land value from the selling price. This technique is used to isolate the contribution of the improvements (such as buildings) from the total property value. By deducting the land value, an appraiser can determine the value attributable solely to the improvements themselves.

This process allows for a more accurate assessment of the property's worth when comparing it to other similar properties in the area, as it recognizes that the land value may vary significantly independent of the structures on it. Subtracting the land value effectively provides a clearer picture of what improvements are contributing to the overall market value, which is essential for effective appraisal practices focused on comparable properties.

Other approaches, such as adding or multiplying the land value with the selling price, do not serve the same purpose of clearly delineating the contributions of land and improvements in this context and therefore would not be the correct first step in the market extraction method.