Market evidence shows that below-market seller financing increased a comparable land sale price above its cash-equivalent price. What adjustment removes that demonstrated premium?
Correct Answer
B) A downward adjustment for the favourable terms
Deduct the supported price premium to express the comparable on a cash-equivalent basis. Below-market financing by itself does not quantify a premium; the stem expressly supplies market evidence of one. A later refinancing is not the condition for adjusting the original sale.
Why This Is the Correct Answer
Deduct the supported price premium to express the comparable on a cash-equivalent basis. Below-market financing by itself does not quantify a premium; the stem expressly supplies market evidence of one. A later refinancing is not the condition for adjusting the original sale.
More Land/Site Questions
How should an appraiser account for a site's access to public sewer compared with competing sites that require septic systems?
Which fact, if supported by competitive-market evidence, most directly supports a unit-price premium for an otherwise comparable site?
A rectangular site's frontage is doubled while its depth is halved, keeping area constant. What is the likely value effect in a retail district?
A downtown site's zoning height limit is reduced from six stories to three. Buyers in this market had been paying for six-story development potential. What effect on land value is most supportable?
A zoning change increases permitted density from four to eight units per acre. What is the likely effect on site value?
Using the allocation method, market evidence supports a typical land-to-total-property-value ratio of 28% for similar improved properties in the subject’s location. An improved comparable sold for $825,000. What land (site) contribution is indicated by applying that ratio?
An appraiser is valuing a vacant site near a landfill. A similar vacant site that is not affected by the landfill sold for $480,000. Paired land sales indicate that proximity to the landfill lowers site prices by $70,000. No other adjustments apply. What is the indicated value of the subject site?
An appraiser is extracting site value from a $600,000 cash sale. The seller's records show an original construction cost of $250,000 and a depreciated book value of $110,000. The appraiser estimates current replacement cost new at $400,000 and accrued depreciation from all causes at $100,000. What is the indicated site value?
Three parcels assembled under single ownership (standard appraisal guidance assemblage) support separate as-is values of $290,000, $340,000, and $250,000. After assemblage for a higher-utility use, the combined site is valued at $1,050,000. Assemblage costs (demolition, legal, holding, and related) total $55,000. What is the indicated net plottage (plottage increment after assemblage costs)?
A comparable commercial site with 65 front feet sold for a cash-equivalent price of $585,000. Per standard appraisal guidance, sale price per front foot is a vacant-land unit of comparison when frontage is a primary value determinant. The subject site has 72 front feet and is otherwise similar. What indicated land value does the front-foot unit support before other adjustments?
People Also Study
Real Estate Market
13.6% of exam
Property Description
11.8% of exam
Sales Comparison Approach
16.4% of exam
Cost Approach
13.6% of exam
Income Approach
8.2% of exam
Previous Question
A ground lease pays the leased-fee owner a stabilized annual net contract rent of $60,000; market ground rent for the site would be $66,000 a year. A market-supported 6% direct capitalization rate is appropriate for the contract income and the leased-fee interest, including the lease terms. What leased-fee value does direct capitalization indicate?
Next Question
The subject site is 3.2 acres. Market data indicate a unit price of $125,000 per acre. What is the indicated land value?
