The subject property is a vacant lot on a corridor recently rezoned for fourplexes and actively redeveloping with them. The only improved sale available for extraction is a house on a similar-sized lot in a stable single-unit neighborhood, and it indicates a site value of $140,000. How should the appraiser treat this indication?
Correct Answer
D) Give it little weight in the site value conclusion
Land evidence must come from properties with the same highest and best use as the subject. The extraction arithmetic may be sound, but it measures single-unit residential land, not a lot priced for fourplex development. A size adjustment or a ratio carries the same mismatch forward, and adding building cost mixes improvements into a land value.
Why This Is the Correct Answer
Option D is correct because comparable evidence should share the subject's highest and best use. The $140,000 reflects single-unit land in a stable neighborhood, while the subject is priced for fourplex development, so the figure deserves little weight in valuing the subject.
Why the Other Options Are Wrong
Option A: Apply it to the subject after a size adjustment
Option A applies the figure to the subject after a size adjustment. Size is not the main difference between these lots; the sale's single-unit highest and best use remains unaddressed.
Option B: Convert it to a land ratio and apply the ratio to the subject
Option B converts the figure to a land ratio and applies the ratio to the subject. A ratio drawn from a single-unit house does not fit a vacant lot on a fourplex corridor, so it carries the same mismatch into the result.
Option C: Raise it by the depreciated cost of a typical fourplex
Option C raises the figure by the depreciated cost of a typical fourplex. Building cost is not land value, and the subject is vacant, so this mixes an improvement cost into a land indication.
Same Use, Same Market
Before trusting any land figure, ask whether it came from land with the subject's highest and best use. A different use points to a different market.
How to use: Use this check to screen each sale before extracting or adjusting land value.
Exam Tip
When zoning or use differs between a sale and the subject, consider whether the data is comparable before focusing on the figures.
Common Mistakes to Avoid
- -Assuming that similar lot size makes a sale comparable for land value
- -Treating correct arithmetic as proof that the evidence is relevant
- -Adding building cost to a land figure to bridge a difference in use
Concept Deep Dive
Analysis
The issue lies past the subtraction, in whether the result is relevant at all. Land value depends on the use the land can support, so a land figure from a site with a different highest and best use is weak evidence. No mechanical adjustment repairs that mismatch here.
Background Knowledge
Land is valued according to its highest and best use, and comparable evidence should share that use. Extraction can produce a mathematically correct remainder that still measures the wrong market. Relevance has to be tested alongside the arithmetic.
Real-World Application
A lot on a redeveloping corridor needs a land value, but the closest sale is a house on a quiet single-unit street. The appraiser notes the extraction result, gives it little weight and looks further for land evidence from similar fourplex sites.
More Land/Site Questions
How should an appraiser account for a site's access to public sewer compared with competing sites that require septic systems?
Which fact, if supported by competitive-market evidence, most directly supports a unit-price premium for an otherwise comparable site?
A rectangular site's frontage is doubled while its depth is halved, keeping area constant. What is the likely value effect in a retail district?
A downtown site's zoning height limit is reduced from six stories to three. Buyers in this market had been paying for six-story development potential. What effect on land value is most supportable?
A zoning change increases permitted density from four to eight units per acre. What is the likely effect on site value?
Using the allocation method, market evidence supports a typical land-to-total-property-value ratio of 28% for similar improved properties in the subject’s location. An improved comparable sold for $825,000. What land (site) contribution is indicated by applying that ratio?
An appraiser is valuing a vacant site near a landfill. A similar vacant site that is not affected by the landfill sold for $480,000. Paired land sales indicate that proximity to the landfill lowers site prices by $70,000. No other adjustments apply. What is the indicated value of the subject site?
An appraiser is extracting site value from a $600,000 cash sale. The seller's records show an original construction cost of $250,000 and a depreciated book value of $110,000. The appraiser estimates current replacement cost new at $400,000 and accrued depreciation from all causes at $100,000. What is the indicated site value?
Three parcels assembled under single ownership (standard appraisal guidance assemblage) support separate as-is values of $290,000, $340,000, and $250,000. After assemblage for a higher-utility use, the combined site is valued at $1,050,000. Assemblage costs (demolition, legal, holding, and related) total $55,000. What is the indicated net plottage (plottage increment after assemblage costs)?
A comparable commercial site with 65 front feet sold for a cash-equivalent price of $585,000. Per standard appraisal guidance, sale price per front foot is a vacant-land unit of comparison when frontage is a primary value determinant. The subject site has 72 front feet and is otherwise similar. What indicated land value does the front-foot unit support before other adjustments?
People Also Study
Real Estate Market
13.6% of exam
Property Description
11.8% of exam
Sales Comparison Approach
16.4% of exam
Cost Approach
13.6% of exam
Income Approach
8.2% of exam
Previous Question
In an otherwise unchanged development cash-flow model, additional holding cash outflows are not already included in another cost or rate. What effect do those additional outflows have on the present residual available for land?
Next Question
An improved sale closed at $425,000. The dwelling’s replacement cost new is $300,000, with an effective age of 12 years and a total economic life of 60 years. Site improvements contribute $15,000. What land value does extraction indicate?