Which unit of comparison is typical for a hotel?
Correct Answer
C) Sale price per room
Hotels and motels are typically compared by sale price per room. Front foot and acre are land units, and cubic foot suits some industrial buildings.
Why This Is the Correct Answer
Option C is correct because hotels and motels are typically compared by sale price per room. Rooms are the revenue-producing units that buyers of lodging properties focus on. This lets the appraiser compare hotels of different sizes on a common basis.
Why the Other Options Are Wrong
Option A: Sale price per front foot
Option A uses sale price per front foot. That is a land unit typically used for sites where frontage drives value, such as some commercial or waterfront lots, not for comparing hotel properties.
Option B: Sale price per cubic foot
Option B uses sale price per cubic foot. That unit suits some industrial buildings such as warehouses where volume matters, not lodging properties.
Option D: Sale price per acre
Option D uses sale price per acre. That is a land unit, often for larger tracts, and does not capture the room count that drives hotel pricing.
Hotels sell by the room
Guests rent rooms, so buyers price hotels by the room.
How to use: Use this to match lodging properties to their typical unit of comparison.
Exam Tip
Match the unit to what generates value for that property type; land units like front foot and acre fit sites, not operating hotels.
Common Mistakes to Avoid
- -Using a land unit to compare improved operating properties
- -Using price per square foot for a hotel without considering room count
- -Confusing cubic-foot units for warehouses with lodging units
Concept Deep Dive
Analysis
This question tests the choice of unit of comparison by property type. The best unit reflects how buyers of that property type think about price. For hotels and motels, price per room is the typical unit.
Background Knowledge
Units of comparison convert sale prices into a common measure so properties of different sizes can be compared. The appropriate unit depends on property type and market behavior. Examples include price per square foot for houses, per unit for apartments and per room for hotels.
Real-World Application
An appraiser analyzing a 120-room motel converts each comparable motel sale to a price per room. She then adjusts those unit prices for location and condition before applying the result to the subject's room count.
More Sales Comparison Questions
Supported adjustments are: non-market financing $10,000, GLA $36/sf, garage $3,500 per car, pool/spa $12,500. A comparable identical to the 2,800 sf subject sold for $267,000 with non-market financing. What is its adjusted price?
Using GLA $36/sf and non-market financing $10,000: a 3,100 sf comparable sold for $277,000 with non-market financing; the subject has 2,800 sf. Bath count differences are not adjusted. What is the adjusted price?
Using garage $3,500 per car and pool/spa $12,500: a comparable with a 2-car garage and a pool/spa sold for $268,000. The subject has a 3-car garage and no pool. What is the adjusted price?
Using GLA $36/sf, garage $3,500 per car and pool/spa $12,500: a 2,600 sf comparable with a 2-car garage and a pool/spa sold for $264,000. The subject is 2,800 sf with a 3-car garage and no pool. What is the adjusted price?
In a neighborhood with declining values and marketing times over six months, what must Fannie Mae lenders confirm about the sales comparison analysis?
A house is a 4,000 square foot home in an area of 2,000 square foot homes. How must the appraiser treat this over-improvement in the sales comparison grid?
According to the Interagency Appraisal and Evaluation Guidelines, which items should an appraisal’s market conditions discussion include?
A comparable listed at $420,000 and sold for $399,000. What sale-to-list price ratio (sale price ÷ list price) does this indicate?
An appraiser wants to describe the neighborhood boundaries in a Fannie Mae report. Which approach is acceptable?
Which of these is listed by Fannie Mae as a sales or financing concession?
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In a subdivision where about half the homes have detached two-car garages, an appraiser estimates the depreciated cost of a comparable's 3-year-old garage at $28,000. Two pairs of recent sales of otherwise similar homes, each pair differing only by a detached two-car garage, show price differences of $17,000 and $19,000. The subject has no garage. What garage adjustment to the comparable does the evidence best support?