An appraiser is valuing a vacant site near a wind farm. A comparable vacant site that is not near wind turbines sold for $575,000. Paired land sales indicate a $90,000 discount for wind farm proximity. No other adjustments apply. What is the indicated value of the subject site?
Correct Answer
A) $485,000
The comparable is superior to the subject for the stated feature. Apply the market difference downward: $575,000 − $90,000 = $485,000. 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 A is correct because the superior comparable is adjusted downward: $575,000 − $90,000 = $485,000. The discount is supported by paired land sales and no other adjustments apply.
Why the Other Options Are Wrong
Option B: $575,000
Option B, $575,000, leaves the comparable unadjusted. The supported $90,000 discount must be deducted, giving $485,000.
Option C: $665,000
Option C, $665,000, adds the discount: $575,000 + $90,000. A superior comparable is adjusted downward, giving $485,000.
Option D: $395,000
Option D, $395,000, deducts the discount twice: $575,000 − $180,000. The $90,000 applies once, giving $485,000.
CBS: Comp Better, Subtract
A comparable that is better than the subject is adjusted down. A comparable that is worse is adjusted up.
How to use: Use CBS to fix the sign of each adjustment before calculating.
Exam Tip
An inferior subject means the comparable is superior, so subtract.
Common Mistakes to Avoid
- -Assuming a discount without local market evidence
- -Adding the adjustment to a superior comparable
- -Applying the adjustment twice
Concept Deep Dive
Analysis
This question tests applying a paired-sale proximity discount to a superior comparable. The comparable is not near the wind farm while the subject is, so the comparable is adjusted downward once by the supported amount.
Background Knowledge
Market reaction to wind turbines varies by area, so any discount must be measured from local evidence. Paired sales isolate the effect of a single difference. The measured amount is applied to the comparable's price.
Real-World Application
An appraiser valuing a rural homesite near a wind farm finds paired sales showing a modest discount for nearby sites. She deducts that supported amount from a comparable outside the turbines' influence.
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Previous Question
Sale price per acre is one of the vacant-land units of comparison. A comparable vacant tract of 8.0 acres sold for a cash-equivalent price of $960,000 and is otherwise similar to the subject in HBU and market conditions. What indicated unit price per acre should be applied before any remaining elements-of-comparison adjustments?
Next Question
An appraiser is valuing a vacant site of 18,400 square feet. Three recent sales of vacant parcels with a similar highest and best use are: Comp A, $800,000 for 16,000 square feet; Comp B, $945,000 for 18,000 square feet; Comp C, $1,100,000 for 20,000 square feet. No other adjustments are needed. Based on the mean of the three sales' prices per square foot, what is the indicated land value?