A 2-acre residential parcel needs 0.5 acre for the existing home; the other 1.5 acres can be split off and sold. Typical half-acre home sites sell for $150,000, and excess land is worth $80,000 per acre. What total land value is indicated?
Correct Answer
A) $270,000
Excess land should be identified and valued separately: the needed site is $150,000 and the excess is 1.5 × $80,000 = $120,000, for $270,000. Valuing all 2 acres at $80,000 gives $160,000; adding the site to 2 acres at $80,000 gives $310,000.
Why This Is the Correct Answer
Option A is correct because the needed half-acre home site is worth $150,000 and the 1.5 acres of excess land are worth 1.5 × $80,000 = $120,000, for a total of $150,000 + $120,000 = $270,000. Excess land should be identified and appraised separately from the site that supports the improvements.
Why the Other Options Are Wrong
Option B: $310,000
Option B, $310,000, is wrong because it applies the excess rate to all 2 acres and adds the home site ($150,000 + 2 × $80,000), counting the home-site half acre twice. The correct total is $150,000 + 1.5 × $80,000 = $270,000.
Option C: $160,000
Option C, $160,000, is wrong because it values the whole 2-acre parcel at the excess-land rate (2 × $80,000) and ignores the home-site value. The correct total is $150,000 + $120,000 = $270,000.
Option D: $230,000
Option D, $230,000, is wrong because it counts only one acre of excess land ($150,000 + $80,000). The excess is 1.5 acres, so the total is $150,000 + 1.5 × $80,000 = $270,000.
Home site plus extra
Price the part the house needs as a home site, then price only the leftover acres at the excess rate.
How to use: Use this split whenever a parcel has more land than the improvements need and the extra can be sold off.
Exam Tip
Subtract the needed site area from the total before applying the excess-land rate so no acreage is counted twice.
Common Mistakes to Avoid
- -Applying the excess-land rate to the entire parcel
- -Counting the home-site area again as excess land
- -Confusing excess land with surplus land that cannot be sold separately
Concept Deep Dive
Analysis
This question tests the separate valuation of excess land. The appraiser values the portion needed to support the existing home as a typical home site and values the extra land that can be split off and sold at its own excess-land rate, then adds the two.
Background Knowledge
Excess land is land not needed to serve the existing improvements that can be separately used or sold. Because it has its own highest and best use and market, it is identified and valued separately, then added to the value of the site that supports the improvements. Surplus land, which cannot be sold separately, is treated differently.
Real-World Application
An appraiser inspects a rural home on a large lot where zoning allows the back portion to be divided into a separate building parcel. The appraiser values the house site using typical home-site sales and the back acreage using land sales per acre, reporting each component.
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Previous Question
Three parcels assembled under single ownership (standard appraisal guidance assemblage / plottage) support separate as-is values of $310,000, $285,000, and $255,000. After assemblage for a higher-utility use, the combined site is valued at $1,000,000. Assemblage costs (legal, demolition, holding, and related) total $70,000. What is the indicated net plottage (gross plottage increment after assemblage costs)?
Next Question
Four parcels assembled under single ownership (standard appraisal guidance assemblage) support separate as-is values of $220,000, $310,000, $195,000, and $175,000. After assemblage for a higher-utility use, the combined site is valued at $1,080,000. Assemblage costs (legal, demolition, holding, and related) total $95,000. What is the indicated net plottage value (gross plottage − assemblage costs)?