Competitive vacant land sales indicate a mean unit price of $42 per SF. The subject land area is 8,500 SF. What is the indicated land value?
Correct Answer
C) $357,000
Value = 8500 square feet × $42/square feet = $357,000. The indicated result is $357,000. Common errors: converting to square yards before applying the per-square-foot rate gives $39,667; misplacing the decimal in the area gives $35,700; misplacing the decimal in the rate gives $3,570,000.
Why This Is the Correct Answer
Option C is correct because the indicated value equals subject area times the supported unit price: 8,500 SF x $42/SF = $357,000. Price per square foot is a recognized unit of comparison for vacant land. Both figures are in square feet, so no conversion is needed.
Why the Other Options Are Wrong
Option A: $35,700
Option A, $35,700, misplaces the decimal in the area, equivalent to 850 SF x $42 = $35,700. The correct calculation is 8,500 SF x $42 = $357,000.
Option B: $39,667
Option B, $39,667, wrongly converts to square yards before applying a per-square-foot rate: 8,500 x $42 / 9 = $39,667. The rate is already per square foot, so 8,500 x $42 = $357,000.
Option D: $3,570,000
Option D, $3,570,000, misplaces the decimal in the rate, effectively using $420 per SF: 8,500 x $420 = $3,570,000. The correct figure is 8,500 x $42 = $357,000.
Match units, then multiply
When the rate is per square foot and the area is in square feet, just multiply.
How to use: Use this check to avoid unnecessary conversions in unit-price problems.
Exam Tip
Estimate the answer first, for example about 8,500 x 40 = 340,000, to spot decimal errors quickly.
Common Mistakes to Avoid
- -Converting square feet to square yards when the rate is already per square foot
- -Dropping or adding a zero in the area or rate
- -Using a unit of comparison the market does not rely on
Concept Deep Dive
Analysis
This question tests the sales comparison unit-price method for vacant land. The supported price per square foot is multiplied by the subject's land area. Keeping units consistent and decimals in place gives the indicated value.
Background Knowledge
Common units of comparison for vacant land include price per front foot, per square foot, per acre, per building site and per unit buildable. The appraiser selects a market-derived unit that reflects how buyers price the property type. The unit price is applied to the subject's corresponding measure.
Real-World Application
An appraiser values an infill commercial lot. Several competing vacant lot sales indicate a consistent price per square foot, which the appraiser applies to the subject's surveyed area.
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