A rectangular site measures 150 feet by 200 feet. Assume the market-supported rate applicable to this site is $8.50 per square foot and no further adjustments are needed. What is the indicated value?
Correct Answer
B) $255,000
Area is 150 × 200 = 30,000 square feet. Apply the supported unit rate: 30,000 × $8.50 = $255,000. This calculation uses the stated comparability assumption; a general neighborhood rate is not automatically appropriate for every site.
Why This Is the Correct Answer
Option B is correct because the site contains 150 x 200 = 30,000 square feet, and 30,000 x $8.50 = $255,000. The question states the rate is market-supported and no further adjustments are needed. Price per square foot is a standard land unit of comparison.
Why the Other Options Are Wrong
Option A: $340,000
Option A, $340,000, equals $8.50 x 40,000 square feet, as if the site were 200 by 200 feet. The actual area is 150 x 200 = 30,000 square feet, so the value is $255,000.
Option C: $191,250
Option C, $191,250, squares the shorter side, as if the site were 150 by 150 feet: 22,500 square feet x $8.50 = $191,250. The site is 150 x 200 = 30,000 square feet, so the value is $255,000.
Option D: $212,500
Option D, $212,500, equals $8.50 x 25,000 square feet, which understates the area. The site is 150 x 200 = 30,000 square feet, giving $255,000.
Length times width times rate
For a rectangle, value = length x width x rate per square foot.
How to use: Use this when a question gives site dimensions and a price per square foot.
Exam Tip
Compute area carefully first; most wrong choices in these questions come from an area error.
Common Mistakes to Avoid
- -Miscalculating area from the dimensions
- -Using a general neighborhood rate without checking comparability
- -Mixing units such as front feet and square feet
Concept Deep Dive
Analysis
This question tests a straightforward area-times-rate land calculation. Compute the rectangle's area, then multiply by the market-supported price per square foot. Each wrong answer corresponds to a wrong area.
Background Knowledge
Once a unit rate is supported by comparable sales, it is applied to the subject's size in the same unit. The rate must be appropriate for the subject's size, location and utility, since unit values can vary with parcel size.
Real-World Application
An appraiser derives a supported rate of $8.50 per square foot from recent comparable land sales. The appraiser applies it to the subject's 30,000-square-foot site to reach a land value indication.
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