A comparable vacant site sold for $615,000. Unlike the comparable, the subject site is near an asphalt batch plant, which makes it inferior. Paired land sales show a proximity stigma discount of $105,000. No other adjustments apply. What is the indicated value of the subject site?
Correct Answer
A) $510,000
The comparable is superior to the subject for the stated feature. Apply the market difference downward: $615,000 − $105,000 = $510,000. This result uses the paired-sale evidence given; the feature's mere presence does not create a universal discount.
Why This Is the Correct Answer
Option A is correct because the superior comparable is adjusted downward by the supported discount: $615,000 − $105,000 = $510,000. No other adjustments apply.
Why the Other Options Are Wrong
Option B: $615,000
Option B, $615,000, makes no adjustment. The paired-sale evidence supports a $105,000 discount for the subject's inferior location, giving $510,000.
Option C: $720,000
Option C, $720,000, adds the discount: $615,000 + $105,000. The comparable is superior, so the adjustment is subtracted, giving $510,000.
Option D: $405,000
Option D, $405,000, subtracts the discount twice: $615,000 − $210,000. The supported $105,000 is applied once, giving $510,000.
CBS: Comp Better, Subtract
A comparable that is better than the subject gets a minus adjustment. A comparable that is worse gets a plus adjustment.
How to use: Use CBS before computing any land or improved-sale adjustment.
Exam Tip
The stem tells you the subject is inferior. That means the comparable is superior and its price goes down.
Common Mistakes to Avoid
- -Adjusting the subject instead of the comparable
- -Adding the discount to a superior comparable
- -Double-counting the discount
Concept Deep Dive
Analysis
This question tests applying a paired-sale stigma adjustment in the correct direction. The comparable is free of asphalt plant proximity, while the subject is affected, so the comparable is superior. Reduce the comparable's price by the supported discount.
Background Knowledge
Nearby industrial uses are external influences that can reduce land value if the market reacts to them. Paired sales compare otherwise similar sites that differ in that one feature. The measured difference is applied to the comparable's price.
Real-World Application
An appraiser valuing a residential lot near an asphalt batch plant finds paired sales showing a discount for nearby lots. She deducts that amount from a comparable located away from the plant.
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