A vacant site being appraised is near a nuclear power plant. A comparable vacant site that is not near a nuclear plant sold for $760,000. Paired land sales indicate a $160,000 discount for proximity to the plant. No other adjustments apply. What is the indicated land value of the subject?
Correct Answer
C) $600,000
The comparable is superior to the subject for the stated feature. Apply the market difference downward: $760,000 − $160,000 = $600,000. This result rests on the paired-sale evidence; the feature's mere presence does not create a universal discount.
Why This Is the Correct Answer
Option C is correct because the comparable without nuclear plant proximity is superior, so its price is adjusted downward: $760,000 − $160,000 = $600,000. The discount is supported by paired land sales and no other adjustments apply.
Why the Other Options Are Wrong
Option A: $760,000
Option A, $760,000, leaves the comparable's price unadjusted. The supported $160,000 discount for the subject's inferior location must be applied, giving $600,000.
Option B: $920,000
Option B, $920,000, adds the discount: $760,000 + $160,000. A superior comparable is adjusted downward, so the result is $600,000.
Option D: $440,000
Option D, $440,000, subtracts the discount twice: $760,000 − $320,000. The $160,000 difference is applied once, giving $600,000.
CBS: Comp Better, Subtract
If the comparable has the better feature, subtract the supported difference from its price. If it has the worse feature, add it.
How to use: Use CBS to set the adjustment sign before you compute.
Exam Tip
Identify which property has the negative feature. Here the subject has it, so the comparable is superior and is adjusted down.
Common Mistakes to Avoid
- -Adding the discount to a superior comparable
- -Assuming a discount without market support
- -Applying the adjustment twice
Concept Deep Dive
Analysis
This question tests the direction of a land sales adjustment for a negative locational influence. The comparable lacks the nuclear plant proximity that affects the subject, so it is superior. Its price must be reduced by the supported paired-sale discount to indicate the subject's value.
Background Knowledge
Proximity to a facility the market views as undesirable is an external influence that can reduce land value. The amount, if any, must be measured from market evidence such as paired sales. Adjustments are applied to the comparable sale price.
Real-World Application
An appraiser valuing rural land within view of a power plant uses paired sales to measure the market discount. She subtracts that supported amount from a comparable located well away from the plant.
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