The subject vacant site has off-site utilities available. A comparable vacant site without utilities sold for $310,000. Paired land sales indicate that sites with a utilities connection sell for $38,000 more than sites without one. No other adjustments apply. What is the indicated value of the subject site?
Correct Answer
A) $348,000
The subject has the stated utility advantage. Adjust the inferior comparable upward by the supported market contribution: $310,000 + $38,000 = $348,000. Do not assume extension cost always equals market value; the paired sales provide the market difference.
Why This Is the Correct Answer
Option A is correct because the comparable without utilities is inferior to the subject, so its price is adjusted up by the supported $38,000: $310,000 + $38,000 = $348,000. Adjustments are made to the comparable, not the subject. The paired-sale difference reflects market reaction rather than extension cost.
Why the Other Options Are Wrong
Option B: $310,000
Option B, $310,000, is the comparable's unadjusted price. It ignores the subject's utility advantage; the correct indication is $310,000 + $38,000 = $348,000.
Option C: $272,000
Option C, $272,000, comes from subtracting the difference: $310,000 - $38,000. Because the comparable is inferior, the adjustment must be upward, giving $348,000.
Option D: $386,000
Option D, $386,000, adds the difference twice: $310,000 + $38,000 + $38,000. The supported adjustment is applied once, giving $310,000 + $38,000 = $348,000.
Comp worse, add
When the comparable is worse than the subject, add to the comparable's price to bring it up to the subject.
How to use: Use this when a comparable lacks a feature the subject has.
Exam Tip
Decide which property is superior first; an inferior comparable always receives an upward adjustment.
Common Mistakes to Avoid
- -Subtracting the adjustment when the comparable is inferior
- -Using utility extension cost as the adjustment without market support
- -Applying the adjustment twice
Concept Deep Dive
Analysis
This question tests adjustment direction when the subject is superior. The comparable lacks utilities and the subject has them, so the comparable's price is adjusted upward by the supported market difference. The difference comes from paired sales, not from connection cost.
Background Knowledge
Availability of utilities is an important site characteristic that often affects land prices. In sales comparison, the market-supported difference, extracted from paired sales or other analysis, is used rather than simply assuming the cost of extending utilities equals their contribution.
Real-World Application
An appraiser values a rural lot with public water and sewer at the road. Paired sales show lots with utilities sell for more than similar lots without, so the appraiser adjusts an unserviced comparable upward by that market-supported amount.
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