A rectangular lot measures 150 feet by 200 feet. If the local market value is $8.50 per square foot, what is the estimated land value?
Correct Answer
B) $255,000
The lot contains 150 × 200 = 30,000 square feet. At $8.50 per square foot: 30,000 × $8.50 = $255,000.
Why This Is the Correct Answer
Option B is correct because it follows the proper two-step calculation process. First, calculate the total square footage: 150 feet × 200 feet = 30,000 square feet. Second, multiply the total area by the market rate: 30,000 square feet × $8.50 per square foot = $255,000. This straightforward multiplication gives us the estimated land value based on the comparable sales data.
Why the Other Options Are Wrong
Option A: $225,000
This answer of $225,000 suggests an error in either the area calculation or the price per square foot calculation, possibly using $7.50 per square foot instead of $8.50, or miscalculating the total square footage.
Option C: $275,000
This answer of $275,000 indicates an error in the calculation process, possibly using a higher price per square foot ($9.17) or making an arithmetic error in the multiplication step.
Option D: $297,500
This answer of $297,500 suggests using an incorrect price per square foot of approximately $9.92, or making a significant calculation error in determining either the area or the final valuation.
L×W×$ Formula
Remember 'Length × Width × $' - Always calculate the area first (L×W), then multiply by the dollar amount per square foot. Think 'LW$' as 'Land Worth $'.
How to use: When you see a land valuation question with dimensions and price per square foot, immediately write 'L×W×$' and fill in: Length × Width = Area, then Area × $ per sq ft = Total Value.
Exam Tip
Always double-check your area calculation before multiplying by the price per square foot - most errors occur in the basic multiplication of dimensions rather than the final valuation step.
Common Mistakes to Avoid
- -Forgetting to calculate total square footage first
- -Mixing up length and width in irregular calculations
- -Using wrong price per square foot or making arithmetic errors in multiplication
Concept Deep Dive
Analysis
This question tests fundamental land valuation calculations using the sales comparison approach with a price per square foot method. The appraiser must correctly calculate the total area of a rectangular lot and multiply by the given market rate per square foot. This is one of the most basic and essential calculations in real estate appraisal, as land valuation forms the foundation for many appraisal methods. The question requires both geometric calculation skills and understanding of how market data is applied to determine property values.
Background Knowledge
Land valuation using price per square foot is a fundamental application of the sales comparison approach, where recent comparable sales are analyzed to determine a market rate per unit area. Appraisers must be proficient in basic geometric calculations to determine lot areas and apply market-derived rates accurately.
Real-World Application
Appraisers regularly use price per square foot analysis when valuing vacant land by comparing recent sales of similar lots in the same area, adjusting for differences in size, location, and other factors to determine market value.
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