A steeply sloping parcel has only half its area usable for building. How is this best reflected?
Correct Answer
D) By comparing it with sales of similar terrain
Analyze slope-related utility, development costs and restrictions with relevant market evidence, including comparable terrain where available. Keep total legal acreage accurate. Do not automatically halve value merely because only half is usable for a building, and do not ignore nonbuilding land’s contribution.
Why This Is the Correct Answer
Option D is correct because comparing the subject with sales of similar terrain lets the market show how buyers price limited buildable area, development costs and slope-related restrictions. Comparable sales should have similar physical and legal characteristics to the subject. This approach avoids both ignoring the limitation and mechanically halving the value.
Why the Other Options Are Wrong
Option A: By valuing the whole area at the market rate
Option A, valuing the whole area at the market rate, ignores that only half the parcel is usable for building. A rate drawn from fully usable sites would likely overstate value unless market evidence shows buyers pay the same for sloped land.
Option B: By ignoring slope, which is a physical trait
Option B, ignoring slope because it is a physical trait, is wrong because physical characteristics directly affect utility and development cost. Slope is a key physical factor that the market prices and the appraiser must analyze.
Option C: By reducing the site's total recorded acreage
Option C, reducing the site's total recorded acreage, misstates the legal description. The full legal area remains part of the parcel; the slope affects how the land is valued, not how much land there is.
Same slope, same story
Sales of land with similar slope tell the same market story about utility and cost as the subject.
How to use: Use this phrase to steer toward comparable-terrain evidence whenever a site has an unusual physical feature.
Exam Tip
Answers that keep the legal area accurate and rely on market evidence for physical features are usually stronger than mechanical shortcuts.
Common Mistakes to Avoid
- -Halving the value because only half the site is buildable
- -Removing unusable acreage from the reported land area
- -Treating slope as irrelevant to market value
Concept Deep Dive
Analysis
This question tests how physical limitations such as steep slope are reflected in land value. Slope affects utility, development costs and possibly restrictions, and the best evidence of its market effect comes from sales with similar physical characteristics. The appraiser keeps the legal acreage accurate and measures the market's reaction rather than applying a mechanical shortcut.
Background Knowledge
Topography influences buildable area, grading and foundation costs, drainage and access, all of which affect land utility. In sales comparison, the appraiser selects comparables with similar physical and legal characteristics or adjusts for differences using market evidence. Nonbuildable land may still contribute value, such as for privacy, views or open space.
Real-World Application
An appraiser values a hillside residential lot where only the lower half can hold a house. Rather than halving the value, the appraiser finds recent sales of similarly sloped lots in the area and studies how buyers priced them relative to level lots.
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