A commercial site is priced per front foot rather than per square foot because:
Correct Answer
C) Front footage measures the exposure buyers actually pay for
Why this is correct: For many commercial sites, especially retail, value is primarily driven by frontage—visibility, access, and signage exposure along a street. Therefore, the market often prices these sites on a price-per-front-foot basis, as depth beyond a standard contributes less value. Depth tables are used to adjust for non-standard depths. Why the other choices are wrong: 'Depth cannot be measured accurately on commercial sites' is false; it can be measured. 'Front foot pricing always produces a higher value' is not true; it's a different unit of comparison. 'Lenders require front foot pricing for commercial loans' is not a standard requirement; the unit of comparison is based on market practice. Exam tip: Think retail = front foot. The value is in the 'face' of the property seen by customers.
Why This Is the Correct Answer
Why this is correct: For many commercial sites, especially retail, value is primarily driven by frontage—visibility, access, and signage exposure along a street. Therefore, the market often prices these sites on a price-per-front-foot basis, as depth beyond a standard contributes less value. Depth tables are used to adjust for non-standard depths. Why the other choices are wrong: 'Depth cannot be measured accurately on commercial sites' is false; it can be measured. 'Front foot pricing always produces a higher value' is not true; it's a different unit of comparison. 'Lenders require front foot pricing for commercial loans' is not a standard requirement; the unit of comparison is based on market practice. Exam tip: Think retail = front foot. The value is in the 'face' of the property seen by customers.
More land-or-site-valuation Questions
Under which condition is the land residual technique most applicable?
What is the appraiser's obligation when a site's legal description does not match its apparent physical boundaries?
Why can the same physical parcel carry different values in two assignments?
A site differs from land in that a site is best described as which of the following?
In a built-up area where no vacant land has sold for years, which approach to site value is the usual fallback?
How is entrepreneurial profit treated in the subdivision development method?
A land comparable sold 18 months ago in a market rising about 4 percent a year. What adjustment direction applies?
In a land residual analysis for a proposed office development, the appraiser estimates total annual net operating income (NOI) will be $1,250,000. The improvement value, derived via the cost approach, is $15,000,000. Market evidence indicates a 7.0% overall capitalization rate is appropriate for similar improved properties. What is the indicated land value?
A developer plans a 36-lot residential subdivision on raw land. Each lot is expected to sell for $85,000. Total development costs (excluding land) are $1,420,000, including $220,000 for entrepreneurial incentive. The developer requires a 12% annual yield on invested capital over a 3-year development period. Using the subdivision development method, what is the maximum price the developer should pay for the land if all lots sell at the projected price and timing?
In applying the land residual technique to a proposed subdivision, an appraiser estimates that the time required to fully absorb all lots will be 6 years. The developer requires a 10% annual yield on invested capital. Which discounting approach is most appropriate for converting future net proceeds to present value?
People Also Study
Valuation Principles & Procedures
25% of exam
Property Description & Analysis
20% of exam
Market Analysis & Highest/Best Use
15% of exam
Appraisal Math & Statistics
15% of exam
USPAP (Ethics & Standards)
15% of exam
Previous Question
An appraiser is using the subdivision development method to value raw land for a proposed 120-lot residential subdivision. Total projected gross lot sales are $18,000,000. Development costs (excluding land) total $4,200,000; marketing and administrative expenses are $900,000; and the developer’s required profit is 12% of total projected gross lot sales. What is the residual land value?
Next Question
A subdivision's absorption is projected at 20 lots a year against a market absorbing 8. What should the appraiser do?