Sales of adjoining land indicate a unit value of $12 per square foot for the subject's 22,000 square feet. Before any separate corridor, assemblage or rights adjustment, what is the preliminary indication by area?
Correct Answer
A) $264,000
Multiply the stated applicable rate by area: $12 per square foot × 22,000 square feet = $264,000. This is only the specified preliminary unit indication. An across-the-fence or corridor appraisal can require additional analysis; the multiplication alone does not establish those other effects.
Why This Is the Correct Answer
Option A is correct because $12 per square foot x 22,000 square feet = $264,000. The question asks only for the preliminary area-rate indication before any separate adjustments. Price per square foot is a recognized land unit of comparison.
Why the Other Options Are Wrong
Option B: $220,000
Option B, $220,000, equals 22,000 square feet x $10, which uses the wrong rate. The supported rate is $12, so the indication is 22,000 x $12 = $264,000.
Option C: $26,400
Option C, $26,400, misplaces the decimal in the rate, as if it were $1.20 per square foot: 22,000 x $1.20 = $26,400. The supported $12 rate gives 22,000 x $12 = $264,000.
Option D: $242,000
Option D, $242,000, equals 22,000 square feet x $11, which understates the rate. The supported $12 rate gives 22,000 x $12 = $264,000.
Rate times area first
Get the base figure by multiplying the supported rate by the area, then consider any separate adjustments afterward.
How to use: Use this when a question asks for a preliminary indication before other adjustments.
Exam Tip
When the stem says before other adjustments, do only the stated multiplication.
Common Mistakes to Avoid
- -Applying assemblage or corridor premiums before the question asks for them
- -Using a rate other than the supported one
- -Misplacing the decimal in the unit rate
Concept Deep Dive
Analysis
This question tests applying a supported unit rate to a subject's area to get a preliminary indication. The calculation is a simple multiplication before any corridor, assemblage or rights adjustments. The distractors reflect wrong rates or a misplaced decimal.
Background Knowledge
In across-the-fence and corridor appraisals, adjoining land values are often used as a starting point. The preliminary area-rate figure may then require further analysis for factors such as corridor characteristics, assemblage or the specific rights involved.
Real-World Application
An appraiser valuing a strip of land for a pipeline corridor starts from the per-square-foot value of adjoining parcels. That preliminary figure is then analyzed for corridor-specific factors before a final conclusion.
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Previous Question
Improved sales in a built-up area show site value at about 25% of total property value. The subject’s total value is estimated at $480,000. What site value does the allocation method indicate?
Next Question
The subject is a vacant site near a pulp and paper mill. A comparable vacant site that is not near such a mill sold for $720,000. Paired land sales indicate a discount of $140,000 for proximity to the mill. No other adjustments apply. What is the indicated land value of the subject?