Market data indicate a land value of $42,000 per allowable dwelling unit. The subject site is zoned for 7 dwelling units, all of which are physically possible, and this unit rate applies to the subject without further adjustment. What land value does the units method indicate?
Correct Answer
C) $294,000
Land indication = 7 allowable dwelling units × $42,000/unit = $294,000. The indicated value is $294,000. This is the result under the stated inputs, not a universal market ratio or an approval of a proposed development. Common errors: misplacing the decimal in the unit count gives $29,400; misplacing the decimal in the rate gives $2,940,000; reporting the unit rate instead of the total gives $42,000.
Why This Is the Correct Answer
Option C is correct because 7 allowable dwelling units × $42,000 per unit = $294,000. The units method values land by its development capacity, using a per-unit rate taken from comparable sales. With seven units supported and the rate applicable, the indicated land value is $294,000.
Why the Other Options Are Wrong
Option A: $29,400
Option A, $29,400, comes from misplacing the decimal in the unit count: 7 × $42,000 ÷ 10 = $29,400. The correct calculation is 7 × $42,000 = $294,000.
Option B: $42,000
Option B, $42,000, reports the value of a single unit instead of the total. The site supports seven units, so the correct result is 7 × $42,000 = $294,000.
Option D: $2,940,000
Option D, $2,940,000, comes from misplacing the decimal in the rate: 7 × $42,000 × 10 = $2,940,000. The correct calculation is 7 × $42,000 = $294,000.
Units times price per unit
Count the units the zoning allows and multiply by what buyers pay per unit; the total is the land indication.
How to use: Use this when a land problem gives a dollar rate per dwelling unit or building site.
Exam Tip
Check that the answer is a total for all units, not the per-unit rate, and estimate the order of magnitude to catch decimal errors.
Common Mistakes to Avoid
- -Reporting the per-unit rate as the land value
- -Counting units that zoning allows but the site cannot physically accommodate
Concept Deep Dive
Analysis
This question tests the units (density) method of land valuation. A market-supported value per allowable dwelling unit is multiplied by the number of units the zoning permits on the subject. Here the question confirms that all seven units are physically possible and the rate applies.
Background Knowledge
Sale price per buildable unit is one of the standard units of comparison for vacant land. It is useful for sites bought for multifamily or subdivision development, where buyers focus on how many units they can build. The allowable unit count must be legally permitted and physically possible.
Real-World Application
A small infill parcel is zoned for seven townhomes. Sales of comparable infill sites show builders paying about $42,000 per allowable unit, so the appraiser indicates a land value of $294,000.
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Previous Question
The subject vacant site is crossed by a power transmission line easement. A comparable vacant site without such an easement sold for $448,000. Paired land sales indicate a $61,000 discount for the easement. No other adjustments apply. What is the indicated land value of the subject?
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The primary site of a property has a highest and best use contribution of $300,000. The property also has 4,000 SF of excess land valued at $25 per SF, net of any required separation costs. The primary-site figure does not include the excess land. What is the total land value?