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Asking Price for the Assessment of a Fruit Orchard: Some Evidence Using the Remote Segments Approach

Author

Listed:
  • Giuseppe Cucuzza

    (Department of Agricultural, Food and Environment, University of Catania, 95123 Catania, Italy)

  • Marika Cerro

    (Department of Agricultural, Food and Environment, University of Catania, 95123 Catania, Italy)

  • Laura Giuffrida

    (Department of Agricultural, Food and Environment, University of Catania, 95123 Catania, Italy)

Abstract

When missing reliable comparables, estimating inappropriately is a high risk in the use of both market-oriented and income approach methods. Therefore, it is useful to identify effective alternatives in accordance with the estimation method to arrive at the estimated value in the absence of comparables. This paper examines the use of the asking price for estimating the market value of a fruit tree orchard, missing comparable data of similar assets. The analysis was conducted by considering two different scenarios. In the first, asking prices from the same segment of the land to be estimated were used in two market-oriented appraisal methods: the General Appraisal System (GAS) and the Nearest Neighbors Appraisal Technique (NNAT). In both these approaches, market prices were replaced with detected asking prices. The second scenario was based on the use of the Remote Segments Approach (RSA). The comparison was conducted between the market segment of the fruit orchard to be valued and other comparison market segments, consisting of three other species of fruit trees, grown in the same area where the fruit orchard to be estimated is located. The results showed that in the first scenario, the estimated value appeared to be unreliable and excessively high compared to actual market conditions. Using the segment comparison method, which applies asking prices for the purpose of determining the capitalization rate, produced more reliable results. The appraisal also appeared more objective, transparent, and consistent with valuation standards. In the presence of similar limiting conditions, RSA can be an effective support to the activity of the appraiser in the valuation process of agricultural land.

Suggested Citation

  • Giuseppe Cucuzza & Marika Cerro & Laura Giuffrida, 2024. "Asking Price for the Assessment of a Fruit Orchard: Some Evidence Using the Remote Segments Approach," Economies, MDPI, vol. 12(10), pages 1-21, September.
  • Handle: RePEc:gam:jecomi:v:12:y:2024:i:10:p:264-:d:1487649
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    References listed on IDEAS

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    1. James Albrecht & Pieter Gautier & Susan Vroman, 2016. "Directed Search in the Housing Market," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 19, pages 218-231, January.
    2. John R. Knight, 2002. "Listing Price, Time on Market, and Ultimate Selling Price: Causes and Effects of Listing Price Changes," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 30(2), pages 213-237.
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    Cited by:

    1. Giuseppe Cucuzza, 2024. "Valuation Standards and Estimation Accuracy in the Appraisal of a Building Housing Vertical Farming," Agriculture, MDPI, vol. 14(12), pages 1-26, December.

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    More about this item

    Keywords

    asking price; market comparison; land market; evaluation standards; income capitalization; Remote Segments Approach; ; D40; E43; Q12; Q15; R39;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • R39 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other

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