The subject property is a 2.0-acre vacant parcel. Recent sales of comparable vacant land indicate a price of $140,000 per acre. What is the indicated land value?
Correct Answer
C) $280,000
Land indication = 2 acres × $140,000/acre = $280,000. The indicated value is $280,000. This is the result under the stated inputs, not a universal market ratio or an approval of a proposed development. Common errors: misplacing the decimal in the acreage gives $28,000; misplacing the decimal in the rate gives $2,800,000; reporting the unit rate instead of the total gives $140,000.
Why This Is the Correct Answer
Option C is correct because the land value equals the unit price times the number of units. The calculation is 2 acres × $140,000 per acre = $280,000.
Why the Other Options Are Wrong
Option A: $28,000
Option A, $28,000, misplaces the decimal in the acreage, as if the site were 0.2 acres: 2 × $140,000 ÷ 10 = $28,000. The correct result is 2 × $140,000 = $280,000.
Option B: $140,000
Option B, $140,000, reports the unit rate for one acre instead of the total for the subject's 2.0 acres. The total is 2 × $140,000 = $280,000.
Option D: $2,800,000
Option D, $2,800,000, misplaces the decimal in the rate, as if the price were $1,400,000 per acre: 2 × $140,000 × 10 = $2,800,000. The correct result is $280,000.
Rate times quantity
Land value = unit rate × number of units. A per-acre rate needs the acreage, not just the rate.
How to use: Use this to check that your answer is a total, not a unit price.
Exam Tip
After computing, compare the answer to the unit price: a 2-acre site should be worth about twice the per-acre rate.
Common Mistakes to Avoid
- -Reporting the per-acre rate as the total value
- -Misreading 2.0 acres as 0.2 acres
- -Using a per-acre rate from much larger or smaller tracts without adjustment
Concept Deep Dive
Analysis
This question tests applying a per-acre unit of comparison. Multiply the supported price per acre by the subject's acreage. Watch for answers that show only the unit price or misplace a decimal.
Background Knowledge
Common units of comparison for vacant land include price per front foot, per square foot, per acre, per building site and per buildable unit. The unit should reflect how buyers in that market price the type of land.
Real-World Application
An appraiser values a 2-acre rural homesite. Sales of similar homesites in the area, analyzed per acre, support a unit rate that she applies to the subject's surveyed acreage.
More Land/Site Questions
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Which fact, if supported by competitive-market evidence, most directly supports a unit-price premium for an otherwise comparable site?
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