The subject is a vacant site near a telecom cell tower. A comparable vacant site without this proximity sold for $550,000. Paired land sales indicate a discount of $83,000 for the proximity stigma, which makes the subject inferior to the comparable. No other adjustments apply. What is the indicated land value of the subject?
Correct Answer
D) $467,000
Adjust the comparable toward the subject: $550,000 − $83,000 = $467,000. An inferior subject requires this downward adjustment to the comparable.
Why This Is the Correct Answer
Option D is correct because the comparable is free of cell tower proximity and therefore superior to the subject. Subtracting the supported $83,000 discount gives $550,000 − $83,000 = $467,000. This reflects what the comparable would have brought with the subject's inferior location.
Why the Other Options Are Wrong
Option A: $550,000
Option A, $550,000, is the comparable's unadjusted price. It ignores the $83,000 supported discount; the correct result is $550,000 − $83,000 = $467,000.
Option B: $633,000
Option B, $633,000, adds the discount: $550,000 + $83,000. The subject has the stigma, so the comparable must be reduced, giving $467,000.
Option C: $384,000
Option C, $384,000, deducts the discount twice: $550,000 − $166,000. Only one supported $83,000 discount applies, giving $467,000.
CBS: Comp Better, Subtract
If the comparable lacks a problem the subject has, the comparable is better, so subtract.
How to use: Use this to check the sign of external influence adjustments.
Exam Tip
Look for the phrase subject inferior; it tells you the comparable gets a downward adjustment.
Common Mistakes to Avoid
- -Adding the discount to the comparable
- -Assuming a stigma discount without market support
- -Deducting the discount twice
Concept Deep Dive
Analysis
This question tests applying a supported stigma discount in the correct direction. The comparable has no cell tower proximity stigma and so is superior to the subject. The supported discount is subtracted: $550,000 − $83,000.
Background Knowledge
A nearby use that buyers find undesirable can reduce land value through negative external influence. The size of any such effect should be supported by market evidence, such as paired sales, rather than assumed. Once supported, the adjustment is applied to the comparable's price.
Real-World Application
An appraiser values a residential lot next to a telecom tower. Paired sales in the market show a measurable discount for similar lots near towers, so the appraiser subtracts it from a comparable located away from any tower.
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Previous Question
A comparable vacant site sold for $690,000. Unlike the comparable, the subject site is near a metal foundry, which makes it inferior. Paired land sales show a proximity stigma discount of $140,000. No other adjustments apply. What is the indicated value of the subject site?
Next Question
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)?