The term “surplus productivity” refers to what in real estate?

Surplus productivity in real estate specifically refers to net income after production costs have been deducted. This concept is critical in determining the value of a property, especially in the context of income-generating properties. Surplus productivity represents the leftover net income that can be attributed to the land after all costs required to generate that income are accounted for.

This concept is essential because it helps appraisers assess the economic benefits and profitability of property investments. In contrast, total market value encompasses the broad value assessment of a property, which does not specifically focus on income after costs. The profit made from selling properties is related but does not directly relate to surplus productivity, as it concerns the entire transaction rather than income generation over time. Gross revenue before expenses simply represents the total income generated without consideration of the necessary expenses that contribute to determining surplus productivity. Thus, recognizing surplus productivity as net income after production costs highlights its importance in understanding revenue generation, investment assessments, and overall property valuations.