A vacant site has 80 front feet. Sales of similar vacant sites in the market area indicate a consistent price of $4,750 per front foot. What is the indicated land value?
Correct Answer
C) $380,000
Value = 80 front feet × $4,750/front feet = $380,000. The indicated result is $380,000. Common errors: misplacing the decimal in the frontage gives $38,000; misplacing the decimal in the rate gives $3,800,000; reporting the unit rate instead of the total gives $4,750.
Why This Is the Correct Answer
Option C is correct because 80 front feet × $4,750 per front foot = $380,000. The market-supported unit rate is applied to the subject's frontage to produce the total indication.
Why the Other Options Are Wrong
Option A: $4,750
Option A, $4,750, is the unit rate per front foot, not the total. Multiplying by the 80 front feet gives 80 × $4,750 = $380,000.
Option B: $38,000
Option B, $38,000, misplaces the decimal, as if the frontage were 8 feet: 8 × $4,750 = $38,000. The correct calculation is 80 × $4,750 = $380,000.
Option D: $3,800,000
Option D, $3,800,000, misplaces the decimal in the rate, as if it were $47,500: 80 × $47,500 = $3,800,000. The correct calculation is 80 × $4,750 = $380,000.
Rate times feet
Total value equals the rate per front foot times the subject's front feet.
How to use: Use a quick estimate (80 × about $5,000 = $400,000) to catch decimal errors.
Exam Tip
Estimate the magnitude before choosing, since decimal-shift distractors differ by a factor of ten.
Common Mistakes to Avoid
- -Reporting the unit rate as the total value
- -Misplacing the decimal in frontage or rate
- -Ignoring depth or other differences after applying the rate
Concept Deep Dive
Analysis
This question tests applying a supported front-foot unit price to the subject's frontage. The total value is the subject's 80 front feet multiplied by the market rate of $4,750 per front foot.
Background Knowledge
Price per front foot is a standard unit of comparison where frontage drives value. Once a consistent rate is supported by comparable sales, it is applied to the subject's frontage. Depth and other differences may still require separate consideration.
Real-World Application
An appraiser values a lakefront residential lot with 80 feet of frontage on the lake. Comparable sales consistently show about $4,750 per front foot, so she multiplies that rate by the subject's frontage.
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Previous Question
Paired land sales in a market area show that proximity to a hog farm reduces the price of a vacant site by $170,000. The subject vacant site is next to a hog farm. A comparable vacant site with no hog farm nearby sold for $850,000. No other adjustments apply. What is the indicated value of the subject land?
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A site produces annual net market income of $63,000 attributable to the land, and the land capitalization rate is 7%. Using direct capitalization of the ground income, what land value is indicated?