An improved property sold twelve months before the effective date of an appraisal for $560,000 cash, when the improvements contributed $360,000. Paired vacant lot sales indicate that land values rose 6% over those twelve months. What site value does this sale indicate as of the effective date?
Correct Answer
B) $212,000
Extraction at the sale date gives $560,000 − $360,000 = $200,000, and the supported 6% rise applies to land: $200,000 × 1.06 = $212,000. Stopping at $200,000 leaves the figure at the sale date. Raising the whole $560,000 by 6% before subtracting gives $233,600, and adding 6% of the $360,000 improvement contribution gives $221,600; the evidence measures land only.
Why This Is the Correct Answer
Option B is correct because the land remainder at the sale date is $560,000 − $360,000 = $200,000. Paired vacant sales measure the change in land values, so the adjusted figure is $200,000 × 1.06 = $212,000.
Why the Other Options Are Wrong
Option A: $200,000
Option A, $200,000, is $560,000 − $360,000, the land value at the sale date. The effective date is twelve months later, so the 6% rise gives $212,000.
Option C: $221,600
Option C, $221,600, adds 6% of the improvement contribution ($360,000 × 0.06 = $21,600) to $200,000. The market evidence measures land, so the increase is $200,000 × 0.06 = $12,000, giving $212,000.
Option D: $233,600
Option D, $233,600, comes from $560,000 × 1.06 − $360,000, which applies the land trend to the whole price. That loads the whole increase onto the land; the correct result is $200,000 × 1.06 = $212,000.
Extract Then Trend Land
First find land at the sale date, then move it forward with the land trend. Match the trend to what it measures.
How to use: Use this order when an older improved sale supplies land evidence and a land trend is given.
Exam Tip
Ask what the stated rate of change was measured on. If it came from vacant sales, apply it to land.
Common Mistakes to Avoid
- -Leaving an extracted land value at the sale date
- -Applying a land trend to the whole property price
- -Adjusting downward for a rising market
Concept Deep Dive
Analysis
The order of operations and the base of the adjustment both matter. Extraction yields land as of the sale date because both inputs are stated at that date. The rate of change describes land, so it applies to the extracted land figure.
Background Knowledge
Market conditions are an element of comparison, reflecting changes in value between a sale date and the effective date. A market trend should be applied to the type of property it measures. A trend from vacant sales measures land, not the improved property as a whole.
Real-World Application
In a rising market with few current vacant sales, an appraiser uses a year-old house sale for land evidence. After extracting land as of the sale date, the appraiser applies the trend from paired vacant sales to bring the land figure to the effective date.
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?
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Previous Question
In a proposed subdivision, 20 finished lots are expected to sell for $95,000 each. All non-land development, selling and holding costs plus entrepreneurial incentive total $1,250,000. Ignoring the timing of all receipts and payments, what residual remains for the land?
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An improved property sold for a cash-equivalent $3,120,000. Its supported depreciated improvement contribution is $1,740,000. Using extraction, with no other property components or adjustments, what land indication results?