A locally derived depth-adjustment table expresses land value factors relative to lots of typical depth. What is the table used to address?
Correct Answer
D) Adjusting for lots deeper or shallower than typical
A market-supported depth table helps account for value differences associated with lots deeper or shallower than the local comparison standard. It is not an acreage conversion, a discount-rate schedule or a land-to-total allocation ratio. No universal depth factor or diminishing-value percentage is supplied by this question.
Why This Is the Correct Answer
Option D is correct because a market-supported depth table accounts for value differences between the subject's depth and the local typical depth. Its factors let the appraiser adjust for lots deeper or shallower than standard.
Why the Other Options Are Wrong
Option A: Converting a lot's frontage into its total acreage
Option A, converting a lot's frontage into its total acreage, is a unit conversion based on dimensions. A depth table reflects how value changes with depth, not how to compute area.
Option B: Setting the discount rate used for lot absorption
Option B, setting the discount rate used for lot absorption, belongs to the subdivision development method. A depth table does not set rates of return.
Option C: Establishing the ratio of site value to total value
Option C, establishing the ratio of site value to total value, describes the allocation method. A depth table compares lots to a typical depth, not land to total property value.
Depth table fixes depth
The name says what it does: a depth table adjusts for depth. It compares each lot to the typical depth in that market.
How to use: Use the table's name to eliminate answers about acreage, rates or allocation.
Exam Tip
Match each tool to its purpose: depth tables for depth, allocation for land-to-total ratio, discounting for subdivision timing.
Common Mistakes to Avoid
- -Assuming value rises in direct proportion to depth
- -Applying a depth table from another market without support
- -Confusing depth adjustment with the allocation method
Concept Deep Dive
Analysis
This question tests the purpose of a depth-adjustment table in land valuation. Such a table expresses value factors relative to a typical-depth lot so that lots deeper or shallower than typical can be compared. It does not convert units, set discount rates, or allocate value between land and buildings.
Background Knowledge
Lots are often priced per front foot, and a typical depth serves as the standard. Extra depth tends to add value at a decreasing rate, while shallow lots may be worth less per front foot. Depth factors should be derived from local market evidence rather than a universal formula.
Real-World Application
In a neighborhood where typical lots are 120 feet deep, an appraiser values a 160-foot-deep lot priced per front foot. She uses a locally derived depth table to reflect the market's reaction to the extra depth.
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A comparable vacant site sold for $615,000. Unlike the comparable, the subject site is near an asphalt batch plant, which makes it inferior. Paired land sales show a proximity stigma discount of $105,000. No other adjustments apply. What is the indicated value of the subject site?
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A vacant site being appraised is near a steel mill. A comparable vacant site that is not near a steel mill sold for $710,000. Paired land sales indicate a $140,000 discount for proximity to the mill. No other adjustments are needed. What is the indicated value of the subject land?