Five cash-equivalent sales of competitive vacant sites indicate $44, $48, $55, $58, and $62 per square foot. The subject site contains 6,400 square feet. Based on the median price per square foot, what is the indicated land value?
Correct Answer
C) $352,000
Median of 44, 48, 55, 58, 62 is $55/SF; 6,400 SF × $55/SF = $352,000. The indicated value is $352,000. This is the result under the stated inputs, not a universal market ratio or an approval of a proposed development. Common errors: using the mean instead of the median gives $341,760; using the lowest unit rate gives $281,600; using the highest unit rate gives $396,800.
Why This Is the Correct Answer
Option C is correct because the median of $44, $48, $55, $58 and $62 per square foot is the middle value, $55. Applying it to the subject gives 6,400 SF × $55 = $352,000.
Why the Other Options Are Wrong
Option A: $281,600
Option A, $281,600, uses the lowest unit rate: 6,400 × $44 = $281,600. The median rate is $55, giving 6,400 × $55 = $352,000.
Option B: $341,760
Option B, $341,760, uses the mean rather than the median: ($44 + $48 + $55 + $58 + $62) ÷ 5 = $53.40, and 6,400 × $53.40 = $341,760. The median is $55, giving $352,000.
Option D: $396,800
Option D, $396,800, uses the highest unit rate: 6,400 × $62 = $396,800. The median rate of $55 gives $352,000.
Sort, pick middle, multiply
For a median unit-price problem: sort the rates, take the middle one, then multiply by the subject's size.
How to use: Use these three steps in order whenever a question asks for a median-based land value.
Exam Tip
Find the median of the unit rates before multiplying; distractors often use the mean or the lowest and highest rates.
Common Mistakes to Avoid
- -Averaging the unit rates when the median is asked for
- -Forgetting to multiply the unit rate by the subject's area
- -Not sorting the rates before picking the middle
Concept Deep Dive
Analysis
This question combines a median unit price with the subject's size. First find the median of the five price-per-square-foot figures, then multiply by the subject's square footage. Avoid using the mean or the extremes.
Background Knowledge
Converting sales to a unit price such as dollars per square foot lets sites of different sizes be compared. The median of the unit prices is a central tendency measure that resists distortion from an extreme sale.
Real-World Application
An appraiser values a 6,400 square foot infill lot. She converts five competing lot sales to price per square foot, uses the median as one indication, and reconciles it with her judgment about the most similar sales.
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
Sales in the market area indicate a value of $4,800 per front foot of street frontage. The subject has 75 front feet. What is the indicated land value?
Next Question
Vacant land may be valued by a multi-comparable median unit price ($/front foot) applied to the subject’s street frontage. Five similar vacant comps support unit prices of $2,400, $2,600, $2,800, $3,000, and $3,200 per front foot. Subject has 180 front feet. What indicated land value by median $/FF results?