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?
Correct Answer
D) $400,000
Excess contribution = 4,000 SF × $25/SF = $100,000; total = $300,000 + $100,000 = $400,000. The indicated value is $400,000. Common errors: leaving out the excess land gives $300,000; reporting only the excess land gives $100,000; subtracting the excess land instead of adding it gives $200,000.
Why This Is the Correct Answer
Option D is correct because the excess land contributes 4,000 SF × $25 per SF = $100,000, and $300,000 + $100,000 = $400,000. Excess land is not needed for the existing use and can be sold separately or support an independent use, so it has its own value. Since it is not already included in the primary site value, it is added to reach total land value.
Why the Other Options Are Wrong
Option A: $100,000
Option A, $100,000, reports only the excess land (4,000 × $25) and leaves out the $300,000 primary site. The correct total is $300,000 + $100,000 = $400,000.
Option B: $200,000
Option B, $200,000, subtracts the excess land instead of adding it: $300,000 − $100,000 = $200,000. Excess land adds value, so the correct total is $300,000 + $100,000 = $400,000.
Option C: $300,000
Option C, $300,000, leaves out the excess land entirely. Because the excess land has its own supported value of 4,000 × $25 = $100,000, the correct total is $400,000.
Excess land is extra value
Excess land can be sold or used on its own, so its value is added on top of the primary site. Surplus land usually is not.
How to use: Use this to tell excess land from surplus land and decide whether to add a separate value.
Exam Tip
Watch for wording that the excess value is not already included in the primary site; that tells you to add it, not to double-count or ignore it.
Common Mistakes to Avoid
- -Treating excess land as surplus land with no separate value
- -Counting the excess land twice when it is already included in the primary site value
Concept Deep Dive
Analysis
This question tests valuing a site that includes excess land. The primary site's contribution under its highest and best use is added to the separately supported value of the excess land. The question states that the excess value is net of separation costs and not already counted in the primary site value.
Background Knowledge
Excess land is land beyond what is needed for the site's primary use that can be sold separately or support an independent use, so it has its own utility and value. Surplus land, by contrast, is not separately marketable and adds little value. Excess land is often valued separately and added to the primary site value.
Real-World Application
A residential lot has an extra 4,000-square-foot strip at the rear that could be split off and sold. The appraiser values the primary site at $300,000 and the separable strip at $25 per square foot, for a total land value of $400,000.
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Previous Question
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?
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A comparable site with 80 front feet sold for a cash-equivalent $720,000. Market analysis supports applying its price per front foot to an otherwise matched subject with 95 front feet. What value does that rate indicate before any remaining adjustments?