A comparable vacant site with 4,000 buildable square feet sold for $480,000. The subject site has 2,800 buildable square feet and is otherwise matched to the comparable. Both buildable-area figures reflect all binding restrictions. Based on price per buildable (FAR) square foot, what is the indicated land value?
Correct Answer
B) $336,000
Rate = $480,000/4,000 buildable SF = $120/buildable SF; subject = 2,800 × $120 = $336,000. The indicated value is $336,000. This is the result under the stated inputs, not a universal market ratio or an approval of a proposed development. Common errors: using the comparable price without adjusting for buildable area gives $480,000; inverting the buildable-area ratio gives $685,714; valuing only the buildable-area difference gives $144,000.
Why This Is the Correct Answer
Option B is correct because the comparable indicates $480,000 / 4,000 buildable SF = $120 per buildable SF. Applying that rate to the subject gives 2,800 × $120 = $336,000. Price per units buildable is a recognized unit of comparison for vacant land.
Why the Other Options Are Wrong
Option A: $144,000
Option A, $144,000, values only the difference in buildable area: (4,000 − 2,800) × $120 = $144,000. The subject's value is its whole buildable area times the rate, 2,800 × $120 = $336,000.
Option C: $480,000
Option C, $480,000, is the comparable's sale price with no adjustment for its larger buildable area. The subject has only 2,800 buildable SF, so 2,800 × $120 = $336,000.
Option D: $685,714
Option D, $685,714, inverts the area ratio: $480,000 / 2,800 × 4,000. The rate must be extracted from the comparable's own area, $480,000 / 4,000 = $120, then applied to 2,800 SF for $336,000.
Divide the comp, multiply the subject
Comp price divided by comp units gives the rate; rate times subject units gives value. Keep each property's numbers with that property.
How to use: Use this for any unit-of-comparison land problem, whether per square foot, acre or buildable unit.
Exam Tip
Check that the answer falls in proportion: a subject with fewer buildable units than the comparable should have a lower value.
Common Mistakes to Avoid
- -Dividing the comparable price by the subject's area
- -Using the comparable's total price without unit adjustment
- -Using land area when the market prices by buildable area
Concept Deep Dive
Analysis
This question tests use of a buildable square foot (FAR-based) unit of comparison. First extract the unit rate from the comparable by dividing its price by its buildable area, then apply that rate to the subject's buildable area. The stem confirms both buildable-area figures reflect all binding restrictions, so the rate can be applied directly.
Background Knowledge
Vacant land is commonly analyzed by units of comparison such as price per front foot, per square foot, per acre, per site, or per unit buildable. Price per buildable square foot is useful where zoning density or floor area ratio drives value. The unit must be extracted from comparables and applied consistently to the subject.
Real-World Application
An appraiser values an infill commercial lot where zoning caps floor area. Comparable lots sell on a price per buildable square foot basis, so the appraiser extracts that rate from a recent sale and applies it to the subject's allowed floor area.
More Land/Site Questions
How should an appraiser account for a site's access to public sewer compared with competing sites that require septic systems?
Which fact, if supported by competitive-market evidence, most directly supports a unit-price premium for an otherwise comparable site?
A rectangular site's frontage is doubled while its depth is halved, keeping area constant. What is the likely value effect in a retail district?
A downtown site's zoning height limit is reduced from six stories to three. Buyers in this market had been paying for six-story development potential. What effect on land value is most supportable?
A zoning change increases permitted density from four to eight units per acre. What is the likely effect on site value?
Using the allocation method, market evidence supports a typical land-to-total-property-value ratio of 28% for similar improved properties in the subject’s location. An improved comparable sold for $825,000. What land (site) contribution is indicated by applying that ratio?
An appraiser is valuing a vacant site near a landfill. A similar vacant site that is not affected by the landfill sold for $480,000. Paired land sales indicate that proximity to the landfill lowers site prices by $70,000. No other adjustments apply. What is the indicated value of the subject site?
An appraiser is extracting site value from a $600,000 cash sale. The seller's records show an original construction cost of $250,000 and a depreciated book value of $110,000. The appraiser estimates current replacement cost new at $400,000 and accrued depreciation from all causes at $100,000. What is the indicated site value?
Three parcels assembled under single ownership (standard appraisal guidance assemblage) support separate as-is values of $290,000, $340,000, and $250,000. After assemblage for a higher-utility use, the combined site is valued at $1,050,000. Assemblage costs (demolition, legal, holding, and related) total $55,000. What is the indicated net plottage (plottage increment after assemblage costs)?
A comparable commercial site with 65 front feet sold for a cash-equivalent price of $585,000. Per standard appraisal guidance, sale price per front foot is a vacant-land unit of comparison when frontage is a primary value determinant. The subject site has 72 front feet and is otherwise similar. What indicated land value does the front-foot unit support before other adjustments?
People Also Study
Real Estate Market
13.6% of exam
Property Description
11.8% of exam
Sales Comparison Approach
16.4% of exam
Cost Approach
13.6% of exam
Income Approach
8.2% of exam
Previous Question
The subject site is 3.2 acres. Market data indicate a unit price of $125,000 per acre. What is the indicated land value?
Next Question
The subject site contains 7,500 square feet. Three cash-equivalent sales of similar vacant sites indicate $45, $48, and $51 per square foot. Based on the mean price per square foot, what is the indicated land value?