You have just spent an information 20 minutes chatting with a local builder who has been building

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Question:

You have just spent an information 20 minutes chatting with a local builder who has been building houses in the area for the past thirty years. His modus operandi is to buy vacant serviced lots, build a home, which he then sells for a profit. This being the case, he feels that he is quite knowledgeable about residential values in the area. In this opinion, a 2,200 square foot dwelling optimizes value in the current market, which he estimates he can sell for $310,000.00. His cost to construct such a dwelling, including a double-attached garage, and landscaping is about $187,000.00

(a) What is an appropriate allocation ratio to apply based on your interview with the builder?

(b) Bear in mind that this information from the builder, although grounded in 30 years of experience, is still only one person´s opinion. How would you cross-check the allocation ratio estimate? Where can you obtain the required data? Provide at least two examples

(c) Summarize the strengths and weaknesses of the three land valuation techniques. Also, explain where each is most useful.