A comparable site with 80 front feet sold for a cash-equivalent $720,000. Market analysis supports applying its price per front foot to an otherwise matched subject with 95 front feet. What value does that rate indicate before any remaining adjustments?
Correct Answer
D) $855,000
Rate = $720,000/80 front feet = $9,000/front foot; subject = 95 × $9,000 = $855,000. The indicated value is $855,000. This is the result under the stated inputs, not a universal market ratio or an approval of a proposed development. Common errors: using the comparable price without adjusting for frontage gives $720,000; inverting the frontage ratio gives $606,316; reporting the value of the frontage difference gives $135,000.
Why This Is the Correct Answer
Option D is correct because $720,000 ÷ 80 front feet = $9,000 per front foot, and 95 front feet × $9,000 = $855,000. The comparable's rate is extracted first, then applied to the subject's larger frontage. This gives the value indicated before any remaining adjustments.
Why the Other Options Are Wrong
Option A: $135,000
Option A, $135,000, is only the value of the 15-foot frontage difference: $720,000 ÷ 80 × (95 − 80) = $135,000. The subject's whole frontage must be valued: 95 × $9,000 = $855,000.
Option B: $606,316
Option B, $606,316, inverts the frontage ratio: $720,000 ÷ 95 × 80 = $606,316. The correct approach divides by the comparable's 80 feet and multiplies by the subject's 95 feet, giving $855,000.
Option C: $720,000
Option C, $720,000, uses the comparable's price without adjusting for the subject's greater frontage. Applying the $9,000 front-foot rate to 95 feet gives $855,000.
Divide the comp, multiply the subject
Divide the comparable's price by its units to get a rate, then multiply that rate by the subject's units.
How to use: Use this two-step pattern for any unit-of-comparison extraction problem.
Exam Tip
A subject with more frontage than the comparable should indicate a higher figure under a front-foot rate, which quickly rules out lower answers.
Common Mistakes to Avoid
- -Dividing by the subject's frontage instead of the comparable's when extracting the rate
- -Valuing only the difference in frontage rather than the whole subject
Concept Deep Dive
Analysis
This question tests extracting a unit rate from a comparable sale and applying it to the subject. The comparable's price is divided by its front footage to get a price per front foot, and that rate is multiplied by the subject's front footage. Market analysis supports using the front-foot rate here.
Background Knowledge
Price per front foot is a unit of comparison often used for sites where street frontage drives value, such as commercial strips or waterfront lots. The rate is extracted by dividing a comparable's price by its frontage. It should be applied only where market analysis supports frontage as the key value driver.
Real-World Application
A commercial lot on a busy corridor has 95 feet of frontage. A similar lot with 80 feet sold for $720,000, and the local market prices these sites by frontage, so the appraiser applies $9,000 per front foot to indicate $855,000.
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