In adjusting land comparables, which adjustment is normally applied before the others?
Correct Answer
B) Adjustment for market conditions since the sale
Why this is correct: In the sales comparison approach, adjustments are applied in a logical sequence. Transactional adjustments (property rights, financing, conditions of sale, market conditions) are applied first because they affect the entire transaction price. Among these, market conditions (time) adjustment is typically applied early in the sequence to bring all comparables to a common date before applying physical or locational adjustments. The original explanation notes this sequence. Why the other choices are wrong: "Adjustment for the physical size of the parcel" is a physical characteristic adjustment, applied after transactional adjustments. "Adjustment for the parcel's zoning classification" is a legal/use adjustment, also typically applied after transactional adjustments. "Adjustment for corner influence and street frontage" is a locational/site adjustment, applied later. Exam tip: Remember the adjustment sequence: Start with transactional adjustments (like time), then move to physical and locational adjustments.
Why This Is the Correct Answer
Why this is correct: In the sales comparison approach, adjustments are applied in a logical sequence. Transactional adjustments (property rights, financing, conditions of sale, market conditions) are applied first because they affect the entire transaction price. Among these, market conditions (time) adjustment is typically applied early in the sequence to bring all comparables to a common date before applying physical or locational adjustments. The original explanation notes this sequence. Why the other choices are wrong: "Adjustment for the physical size of the parcel" is a physical characteristic adjustment, applied after transactional adjustments. "Adjustment for the parcel's zoning classification" is a legal/use adjustment, also typically applied after transactional adjustments. "Adjustment for corner influence and street frontage" is a locational/site adjustment, applied later. Exam tip: Remember the adjustment sequence: Start with transactional adjustments (like time), then move to physical and locational adjustments.
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Previous Question
A property produces net operating income of $180,000. The building is worth $1,200,000 and the building capitalization rate is 10 percent. If the land capitalization rate is 8 percent, what is the indicated land value?
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A tract will yield 40 lots selling at $80,000 each. Development costs are $1,200,000, sales and marketing run 8 percent of gross, and the developer requires a 20 percent profit on gross. Ignoring discounting, what land value is indicated?