The subject is a vacant site on a steep slope. A comparable vacant site on level ground sold for $340,000. Paired land sales indicate a $38,000 discount for the slope. No other adjustments apply. What is the indicated value of the subject site?
Correct Answer
A) $302,000
Adjust the comparable toward the subject: $340,000 − $38,000 = $302,000. An inferior subject requires this downward adjustment to the comparable.
Why This Is the Correct Answer
Option A is correct because the level comparable is better than the sloped subject, so its price is adjusted downward: $340,000 − $38,000 = $302,000. Adjustments are made to the comparable property to reflect the subject's inferior topography.
Why the Other Options Are Wrong
Option B: $340,000
Option B, $340,000, is the comparable's unadjusted price. It ignores the supported $38,000 slope discount; the correct value is $340,000 − $38,000 = $302,000.
Option C: $378,000
Option C, $378,000, adds the discount ($340,000 + $38,000), which would apply only if the subject were superior. The subject is inferior, so the value is $302,000.
Option D: $264,000
Option D, $264,000, deducts the $38,000 discount twice ($340,000 − $76,000). Only one supported discount applies, giving $302,000.
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
Identify which property has the better feature first; here the level comparable is better, so its price comes down.
Common Mistakes to Avoid
- -Adding the discount to the comparable
- -Leaving the comparable unadjusted
- -Applying the discount twice
Concept Deep Dive
Analysis
This question tests adjustment direction for a physical land characteristic. The subject has a steep slope while the comparable is level, so the subject is inferior. The comparable's price is reduced by the paired-sales discount.
Background Knowledge
Topography affects land value through building costs, usable area, drainage and access. Steep slopes often increase site preparation costs or limit building placement, and the market effect is measured from evidence such as paired sales.
Real-World Application
An appraiser values a hillside homesite that will need retaining walls and extra grading. Paired sales of level and sloped lots in the area support a discount, which the appraiser deducts from a level comparable sale.
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