The subject vacant site has shared access over a driveway easement. A comparable vacant site with unencumbered access sold for $410,000. Paired land sales indicate a $55,000 discount for shared access. No other adjustments apply. What is the indicated value of the subject site?
Correct Answer
C) $355,000
Adjust the comparable toward the subject: $410,000 − $55,000 = $355,000. An inferior subject requires this downward adjustment to the comparable.
Why This Is the Correct Answer
Option C is correct because the comparable with unencumbered access is superior to the subject, so its price is reduced by the supported $55,000: $410,000 - $55,000 = $355,000. Adjustments are made to the comparable toward the subject. The paired sales supply the amount.
Why the Other Options Are Wrong
Option A: $410,000
Option A, $410,000, is the comparable's unadjusted price. It ignores the subject's inferior shared access; the correct indication is $410,000 - $55,000 = $355,000.
Option B: $465,000
Option B, $465,000, adds the discount: $410,000 + $55,000. The superior comparable must be adjusted down, giving $355,000.
Option D: $300,000
Option D, $300,000, subtracts the discount twice: $410,000 - $55,000 - $55,000. Applied once, the indication is $410,000 - $55,000 = $355,000.
CBS: comp better, subtract
If the Comparable is Better, Subtract; if the comparable is inferior, add.
How to use: Use this to choose the sign of a sales comparison adjustment.
Exam Tip
A subject burdened by an easement the comparable lacks calls for a downward adjustment to the comparable.
Common Mistakes to Avoid
- -Adding the discount to a superior comparable
- -Adjusting the subject instead of the comparable
- -Applying the discount twice
Concept Deep Dive
Analysis
This question tests adjustment direction for an access encumbrance. The comparable has unencumbered access while the subject has shared access, so the comparable is superior and its price is reduced by the supported discount. The discount is applied once.
Background Knowledge
Easements such as shared driveways can reduce utility, privacy or flexibility and may affect market value. The size of any effect should be supported by market evidence such as paired sales rather than assumed.
Real-World Application
An appraiser values a lot reached by a driveway shared with a neighbor. Paired sales show such lots sell for less than lots with private access, so the appraiser reduces the price of a comparable with its own driveway.
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