Which of the following is a legal rather than a physical characteristic of a site?
Correct Answer
B) The zoning classification that applies to it
Why this is correct: The zoning classification that applies to it is a legal characteristic of a site. Legal characteristics are man-made rules and restrictions that govern land use, such as zoning ordinances, deed restrictions, easements, and building codes. They define what can legally be done with the property. Why the other choices are wrong: "The slope and drainage across the parcel," "The soil bearing capacity beneath the surface," and "The shape and dimensions of the boundaries" are all physical characteristics—inherent attributes of the land itself. Exam tip: Legal characteristics can be changed through application or legal process; physical characteristics are generally fixed.
Why This Is the Correct Answer
Why this is correct: The zoning classification that applies to it is a legal characteristic of a site. Legal characteristics are man-made rules and restrictions that govern land use, such as zoning ordinances, deed restrictions, easements, and building codes. They define what can legally be done with the property. Why the other choices are wrong: "The slope and drainage across the parcel," "The soil bearing capacity beneath the surface," and "The shape and dimensions of the boundaries" are all physical characteristics—inherent attributes of the land itself. Exam tip: Legal characteristics can be changed through application or legal process; physical characteristics are generally fixed.
More land-or-site-valuation Questions
Under which condition is the land residual technique most applicable?
What is the appraiser's obligation when a site's legal description does not match its apparent physical boundaries?
Why can the same physical parcel carry different values in two assignments?
A site differs from land in that a site is best described as which of the following?
In a built-up area where no vacant land has sold for years, which approach to site value is the usual fallback?
How is entrepreneurial profit treated in the subdivision development method?
A land comparable sold 18 months ago in a market rising about 4 percent a year. What adjustment direction applies?
In a land residual analysis for a proposed office development, the appraiser estimates total annual net operating income (NOI) will be $1,250,000. The improvement value, derived via the cost approach, is $15,000,000. Market evidence indicates a 7.0% overall capitalization rate is appropriate for similar improved properties. What is the indicated land value?
A developer plans a 36-lot residential subdivision on raw land. Each lot is expected to sell for $85,000. Total development costs (excluding land) are $1,420,000, including $220,000 for entrepreneurial incentive. The developer requires a 12% annual yield on invested capital over a 3-year development period. Using the subdivision development method, what is the maximum price the developer should pay for the land if all lots sell at the projected price and timing?
In applying the land residual technique to a proposed subdivision, an appraiser estimates that the time required to fully absorb all lots will be 6 years. The developer requires a 10% annual yield on invested capital. Which discounting approach is most appropriate for converting future net proceeds to present value?
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When performing a land residual analysis for a proposed subdivision, the appraiser includes an allowance for entrepreneurial incentive. How is this item treated in the subdivision development method?
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Site improvements cost $40,000 to install but add only $25,000 to what buyers will pay. What is the $25,000 called?