The time value of an option is primarily derived from the uncertainty of future income. Estimates of the time value to land value ratio obtained in the literature vary substantially. For example, Quigg (1993) yields a 6% estimate, whereas Sing and Patel (2001) obtain estimates in the range of 16-29%. This study develops a model to explain the difference in the estimates of the ratio. Depending on the stages of land development and locations, time value can vary between 0-100% of the option value. The proposed model suggests that as a percentage of the land value, time value increases prior to the optimal development time under an assumption of perfect foresight, and decreases afterwards. Additionally, the percentage approaches zero as the land development approaches completion.