The subject is a vacant site affected by airport noise and an aviation easement. A comparable vacant site without these conditions sold for $460,000. Paired land sales indicate a discount of $65,000 for airport noise and an aviation easement, which makes the subject inferior to the comparable. No other adjustments apply. What is the indicated land value of the subject?
Correct Answer
B) $395,000
Adjust the comparable toward the subject: $460,000 − $65,000 = $395,000. An inferior subject requires this downward adjustment to the comparable.
Why This Is the Correct Answer
Option B is correct because the comparable without the easement is superior, so its price is reduced to reflect the subject: $460,000 − $65,000 = $395,000. The discount comes from paired land sales, which is a recognized way to support adjustments. No other adjustments apply.
Why the Other Options Are Wrong
Option A: $460,000
Option A, $460,000, makes no adjustment for the airport-noise and aviation-easement difference. The supported indication is $460,000 − $65,000 = $395,000.
Option C: $525,000
Option C, $525,000, adds the discount instead of subtracting it: $460,000 + $65,000 = $525,000. Because the subject is inferior, the comparable is adjusted down to $395,000.
Option D: $330,000
Option D, $330,000, subtracts the discount twice: $460,000 − (2 × $65,000) = $330,000. The supported discount is applied once, giving $395,000.
Comp better, adjust down
If the comparable is better than the subject, subtract; if it is worse, add.
How to use: Use this to set the sign of every adjustment in a sales comparison grid.
Exam Tip
Decide first whether the comparable is superior or inferior to the subject, then apply the adjustment to the comparable in that direction.
Common Mistakes to Avoid
- -Adjusting in the wrong direction
- -Applying the adjustment to the subject instead of the comparable
- -Applying the same discount more than once
Concept Deep Dive
Analysis
This question tests the direction of a sales comparison adjustment. Adjustments are made to the comparable to make it like the subject. Because the subject has the aviation easement and noise and is inferior, the comparable's price is adjusted downward by the supported discount.
Background Knowledge
In sales comparison, adjustments are made to the comparable property, not the subject. When the comparable is superior, its price is adjusted downward; when it is inferior, its price is adjusted upward. Paired sales analysis is one way to support the size of an adjustment.
Real-World Application
An appraiser values a vacant site under an airport approach path with a recorded aviation easement. Paired sales show a supported discount for such sites, so the appraiser reduces the price of a comparable site outside the noise zone by that amount.
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