Which situation would indicate a site is over-improved?
Correct Answer
A) An excessive feature’s cost is not supported by its market contribution
An over-improvement provides features or scale whose incremental cost is not supported by the market contribution in that setting. Cost exceeding contribution alone should be analyzed for the actual cause; extra acreage, age or small site area does not independently prove superadequacy.
Why This Is the Correct Answer
Option A is correct because an over-improvement provides features or scale whose cost is not supported by their market contribution in that setting. The excess cost does not translate into equal value, which signals superadequacy.
Why the Other Options Are Wrong
Option B: The site has much more acreage than the footprint of the house actually needs
Option B describes a site with much more acreage than the house footprint needs. Extra land may be excess or surplus land, but by itself it does not show that an improvement is larger or costlier than the market supports.
Option C: The building is older than the other buildings in the neighborhood
Option C describes a building older than others in the neighborhood. Age relates to depreciation, not to an improvement whose cost exceeds its contribution, so it does not by itself indicate over-improvement.
Option D: The site is smaller than the average lot size in the neighborhood
Option D describes a site smaller than the average lot in the neighborhood. A small lot does not by itself show that an improvement costs more than it contributes.
Cost above contribution
If you spent more than the market will pay back, the feature is over-built.
How to use: Use this test to spot superadequacies in improvement questions.
Exam Tip
Focus on whether cost exceeds market contribution, not on lot size or building age alone.
Common Mistakes to Avoid
- -Treating large acreage as proof of over-improvement
- -Confusing building age with superadequacy
- -Equating an improvement's cost with its contribution to value
Concept Deep Dive
Analysis
This question tests the concept of over-improvement, or superadequacy. An over-improvement exists when an improvement is larger or costlier than the market supports, so its cost exceeds its contribution to value. The key is the gap between cost and market contribution.
Background Knowledge
An over-improvement is an improvement that is larger or costlier than typical for the neighborhood, so the market does not pay its full cost. Its effect is often measured as functional obsolescence from a superadequacy. Contribution, not cost, determines how much a feature adds to value.
Real-World Application
A homeowner in a modest neighborhood adds an elaborate indoor pool costing far more than buyers there will pay. The appraiser finds through paired sales that the pool contributes only a fraction of its cost and treats the difference as a superadequacy.
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The subject is a vacant site of 19,500 square feet. Three recent sales of vacant parcels with a similar highest and best use are: Comp A, $900,000 for 18,000 square feet; Comp B, $1,040,000 for 20,000 square feet; Comp C, $1,188,000 for 22,000 square feet. No other adjustments are needed. Based on the mean of the three sales' prices per square foot, what is the indicated land value?
Next Question
Paired land sales in a market area show that proximity to a hog farm reduces the price of a vacant site by $170,000. The subject vacant site is next to a hog farm. A comparable vacant site with no hog farm nearby sold for $850,000. No other adjustments apply. What is the indicated value of the subject land?