The subject vacant site is near a solar farm. A comparable vacant site that is not near a solar array sold for $590,000. In the market area, paired land sales indicate a discount of $95,000 for solar farm proximity. No other adjustments apply. What is the indicated land value of the subject?
Correct Answer
B) $495,000
Adjust the comparable toward the subject: $590,000 − $95,000 = $495,000. An inferior subject requires this downward adjustment to the comparable.
Why This Is the Correct Answer
Option B is correct because the comparable is better than the subject, so its price is reduced by the supported discount: $590,000 − $95,000 = $495,000. Adjustments are made to the comparable property to reflect the subject's characteristics.
Why the Other Options Are Wrong
Option A: $590,000
Option A, $590,000, is the unadjusted comparable sale price. It ignores the supported $95,000 proximity discount; the correct value is $590,000 − $95,000 = $495,000.
Option C: $685,000
Option C, $685,000, adds the discount ($590,000 + $95,000), which would apply only if the subject were superior. The subject is inferior, so the correct value is $495,000.
Option D: $400,000
Option D, $400,000, deducts the $95,000 discount twice ($590,000 − $190,000). Only one supported discount applies, giving $495,000.
CBS: comparable better, subtract
If the comparable is better than the subject, subtract from the comparable. If the comparable is inferior, add to it.
How to use: Use this whenever you need to decide the sign of a comparable adjustment.
Exam Tip
An inferior subject means the comparable is superior, so the adjustment reduces the comparable's price.
Common Mistakes to Avoid
- -Adding the discount because the subject is the affected property
- -Ignoring a supported adjustment
- -Deducting the same discount twice
Concept Deep Dive
Analysis
This question tests adjustment direction when the subject has an external stigma, here proximity to a solar farm or array. Because the subject is inferior to the unaffected comparable, the comparable's price is adjusted downward. The discount comes from paired land sales.
Background Knowledge
Proximity influences can affect land value positively or negatively depending on how buyers react. Appraisers measure any effect from market evidence, such as paired sales of affected and unaffected sites, rather than assuming it. The supported amount is then applied to the comparable in the correct direction.
Real-World Application
An appraiser values a vacant rural homesite next to a newly built solar array. Local paired sales show buyers paid less for sites with a direct view of the array, so the appraiser deducts that supported amount from an unaffected comparable.
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