The subject vacant site is next to a railroad line and is exposed to rail noise. A comparable vacant site away from the railroad sold for $470,000. Paired land sales indicate a $68,000 discount for railroad proximity and noise. No other adjustments apply. What land value is indicated for the subject?
Correct Answer
C) $402,000
Adjust the comparable toward the subject: $470,000 − $68,000 = $402,000. An inferior subject requires this downward adjustment to the comparable.
Why This Is the Correct Answer
Option C is correct because the comparable is superior to the subject, so its price is reduced by the supported discount: $470,000 - $68,000 = $402,000. The discount was extracted from paired land sales, a recognized method of supporting adjustments. With no other adjustments, $402,000 is the indicated land value.
Why the Other Options Are Wrong
Option A: $470,000
Option A, $470,000, uses the comparable's sale price without any adjustment. The subject is inferior, so the price must be reduced: $470,000 - $68,000 = $402,000.
Option B: $538,000
Option B, $538,000, adds the discount instead of subtracting it: $470,000 + $68,000 = $538,000. An inferior subject calls for a downward adjustment to the comparable: $470,000 - $68,000 = $402,000.
Option D: $334,000
Option D, $334,000, deducts the discount twice: $470,000 - $68,000 - $68,000 = $334,000. Only one deduction applies: $470,000 - $68,000 = $402,000.
CBS: Comp Better, Subtract
If the Comp is Better than the subject, Subtract; if the comp is worse, add.
How to use: Use CBS whenever you must decide the sign of an adjustment to a comparable.
Exam Tip
Identify which property has the feature and which is superior before choosing the sign; the adjustment goes on the comparable's price.
Common Mistakes to Avoid
- -Adding the discount to a superior comparable
- -Adjusting the subject instead of the comparable
- -Applying the same adjustment twice
Concept Deep Dive
Analysis
This question tests the direction of a sales comparison adjustment. Adjustments are made to the comparable to make it resemble the subject. Because the subject suffers rail proximity and noise that the comparable lacks, the subject is inferior and the comparable's price is adjusted downward by the paired-sales discount.
Background Knowledge
In sales comparison, adjustments are made to the comparable property, not the subject. If the comparable is superior, its price is adjusted downward; if inferior, upward. Paired sales analysis isolates the effect of a single difference by comparing otherwise similar sales.
Real-World Application
An appraiser values a vacant lot beside an active freight line. Paired sales of similar lots near and away from the tracks show a consistent discount, which the appraiser deducts from a comparable lot that is not near the railroad.
More Land/Site Questions
How should an appraiser account for a site's access to public sewer compared with competing sites that require septic systems?
Which fact, if supported by competitive-market evidence, most directly supports a unit-price premium for an otherwise comparable site?
A rectangular site's frontage is doubled while its depth is halved, keeping area constant. What is the likely value effect in a retail district?
A downtown site's zoning height limit is reduced from six stories to three. Buyers in this market had been paying for six-story development potential. What effect on land value is most supportable?
A zoning change increases permitted density from four to eight units per acre. What is the likely effect on site value?
Using the allocation method, market evidence supports a typical land-to-total-property-value ratio of 28% for similar improved properties in the subject’s location. An improved comparable sold for $825,000. What land (site) contribution is indicated by applying that ratio?
An appraiser is valuing a vacant site near a landfill. A similar vacant site that is not affected by the landfill sold for $480,000. Paired land sales indicate that proximity to the landfill lowers site prices by $70,000. No other adjustments apply. What is the indicated value of the subject site?
An appraiser is extracting site value from a $600,000 cash sale. The seller's records show an original construction cost of $250,000 and a depreciated book value of $110,000. The appraiser estimates current replacement cost new at $400,000 and accrued depreciation from all causes at $100,000. What is the indicated site value?
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)?
A comparable commercial site with 65 front feet sold for a cash-equivalent price of $585,000. Per standard appraisal guidance, sale price per front foot is a vacant-land unit of comparison when frontage is a primary value determinant. The subject site has 72 front feet and is otherwise similar. What indicated land value does the front-foot unit support before other adjustments?
People Also Study
Real Estate Market
13.6% of exam
Property Description
11.8% of exam
Sales Comparison Approach
16.4% of exam
Cost Approach
13.6% of exam
Income Approach
8.2% of exam
Previous Question
Parcel A is valued at $175,000 as a separate site and Parcel B at $155,000 as a separate site. Combined under one ownership, the highest and best use of the assembled site gives it a market value of $380,000. What is the plottage value?
Next Question
Market ground rent for a site is a stabilized $48,000 per year, and the landowner pays expenses of $3,000 per year. Market data indicate a land capitalization rate of 6.0%. The rent and the rate both reflect the interest and lease terms being valued. Using ground rent capitalization, what is the indicated land value?