What is the formula used to calculate the allocation ratio in the context of real estate appraising?

The allocation ratio in real estate appraising is determined by comparing the value of land to the value of improved properties. This ratio is crucial for appraisers when assessing the value contribution of the land as compared to the improvements on it. The correct formula for calculating the allocation ratio is to take the value of the comparable land sale and divide it by the value of the comparable improved sale.

This approach provides the appraiser with a clear perspective on how much value can be attributed to the land in relation to the entire property, which helps in accurately determining the value of the subject property being evaluated. Understanding how to derive this ratio is essential for making informed decisions in property valuation, ensuring that the appraisal reflects the true market dynamics.

In contrast, the other options focus on different relationships or metrics that do not properly yield the allocation ratio as defined within the context of real estate appraising. Each alternative involves a calculation that deviates from the established method necessary for accurate allocation ratio analysis.