Verified sales of competitive downtown residential lots were negotiated and analyzed primarily by site area, with no material frontage or density differences. Which unit of comparison most directly reflects this market's practice?
Correct Answer
A) Price per square foot of land area
Price per square foot of land area is suitable under the stated market evidence. A downtown label alone does not mandate it. Frontage, building sites, permitted units or buildable floor area may be more informative in other competitive markets; here the stated convention is site area.
Why This Is the Correct Answer
Option A is correct because the stated market evidence shows sites are priced by area, and price per square foot of land area is the area unit that matches that convention. The choice comes from the market evidence, not from the downtown label alone.
Why the Other Options Are Wrong
Option B: Price per building site sold
Option B, price per building site sold, treats each site as one unit without measuring its size. It suits markets where sites are similar and trade as lots, but these sites are negotiated and analyzed by area, so a per-site price does not match the stated convention.
Option C: Price per dwelling unit permitted
Option C, price per dwelling unit permitted, is a density-based unit. The stem says there are no material density differences, so it does not match a market that prices sites by area.
Option D: Price per front foot of the lot
Option D, price per front foot of the lot, is used where frontage drives value. The stem says there are no material frontage differences, so it does not match the stated area-based convention.
Use the market's own yardstick
Measure land the way buyers and sellers in that market measure it.
How to use: Use this to choose the unit of comparison in any land valuation question.
Exam Tip
Look for the unit stated or implied by the market evidence in the stem rather than one chosen from a property label.
Common Mistakes to Avoid
- -Choosing a unit based on the property type label rather than market evidence
- -Using front-foot pricing where frontage does not drive value
- -Pricing by building site when sites differ in size and trade by area
Concept Deep Dive
Analysis
This question tests matching the unit of comparison to how the market actually prices sites. The stem states that buyers negotiate and analyze downtown vacant sites primarily by site area, with no material frontage or density differences. Price per square foot of land area is the listed unit that directly reflects that convention; the other choices measure lots, density or frontage instead of area.
Background Knowledge
Common units of comparison for vacant land include price per front foot, per square foot, per acre, per building site and per unit buildable. The appropriate unit is the one the market uses to negotiate and analyze sales. Choosing it based on market evidence improves the reliability of the comparison.
Real-World Application
An appraiser interviews brokers about downtown parking lot sales and learns deals are quoted by price per square foot of land. She converts each comparable to that unit before adjusting and reconciling.
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
In the cost approach for an improved residential lot with streets, utilities and grading in place, which land figure is the appraiser concerned with?
Next Question
Zoning permits immediate development of a site, but supported current and reasonably forecast revenues for that proposal do not cover its development costs and required return. What follows for that immediate proposal?