The subject site is 3.2 acres. Market data indicate a unit price of $125,000 per acre. What is the indicated land value?
Correct Answer
C) $400,000
Value = 3.2 acres × $125,000/acre = $400,000. The indicated value is $400,000. This is the result under the stated inputs, not a universal market ratio or an approval of a proposed development. Common errors: misplacing the decimal in the acreage gives $40,000; misplacing the decimal in the rate gives $4,000,000; reporting the unit rate instead of the total gives $125,000.
Why This Is the Correct Answer
Option C is correct because 3.2 acres x $125,000 per acre = $400,000. This is the result under the stated inputs, applying the market-supported unit price to the subject's known acreage.
Why the Other Options Are Wrong
Option A: $40,000
Option A, $40,000, comes from 3.2 x $125,000 / 10 = $40,000, which misplaces the decimal in the acreage. The correct product is 3.2 x $125,000 = $400,000.
Option B: $125,000
Option B, $125,000, reports the unit rate per acre instead of the total for 3.2 acres. Multiplying by the acreage gives $400,000.
Option D: $4,000,000
Option D, $4,000,000, comes from 3.2 x $125,000 x 10 = $4,000,000, which misplaces the decimal in the rate. The correct value is 3.2 x $125,000 = $400,000.
Units times rate
Indicated value equals the subject's number of units times the market price per unit. A little over 3 acres at $125,000 per acre should land around $400,000, not in the tens of thousands or the millions.
How to use: Use a quick estimate to catch decimal errors before choosing an answer.
Exam Tip
Estimate first: 3 x $125,000 = $375,000, so the answer should be near $400,000. That rules out the decimal-error choices at once.
Common Mistakes to Avoid
- -Reporting the per-acre rate as the total value
- -Shifting the decimal in the acreage or the rate
- -Using a unit of comparison the local market does not use
Concept Deep Dive
Analysis
This calculation tests applying a market-derived unit of comparison to the subject's size. Price per acre is a standard unit for land, and the indicated value is the subject acreage times the supported unit price. The distractors come from decimal errors or reporting the unit rate as the total.
Background Knowledge
Land is often compared using units such as price per front foot, per square foot, per acre, per building site or per buildable unit. The appraiser derives a unit price from comparable sales and applies it to the subject's corresponding quantity. The unit chosen should reflect how buyers in that market price similar land.
Real-World Application
An appraiser values a 3.2-acre vacant rural homesite zoned for residential use. Sales of similar parcels, adjusted for differences, indicate a supported price per acre, which the appraiser applies to the subject's acreage. The appraiser also checks whether another unit, such as price per site, is what local buyers rely on.
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
Market evidence shows that below-market seller financing increased a comparable land sale price above its cash-equivalent price. What adjustment removes that demonstrated premium?
Next Question
A comparable vacant site with 4,000 buildable square feet sold for $480,000. The subject site has 2,800 buildable square feet and is otherwise matched to the comparable. Both buildable-area figures reflect all binding restrictions. Based on price per buildable (FAR) square foot, what is the indicated land value?