Why can the same physical parcel carry different values in two assignments?
Correct Answer
C) Because the interests or dates may differ
Why this is correct: Value is specific to the property interest appraised (e.g., fee simple vs. leased fee) and the effective date of the appraisal. Different assignments can legitimately define these elements differently, leading to different value conclusions. Why the other choices are wrong: While appraisers can reach different conclusions, the principle reason is the defined elements of the assignment. Site value does not change seasonally in a professional context. Using more comparables is a methodological difference, not the fundamental reason. Exam tip: Value is not an absolute number. Always note: Value of what (interest), to whom, for what purpose, as of when, and under what conditions?
Why This Is the Correct Answer
Why this is correct: Value is specific to the property interest appraised (e.g., fee simple vs. leased fee) and the effective date of the appraisal. Different assignments can legitimately define these elements differently, leading to different value conclusions. Why the other choices are wrong: While appraisers can reach different conclusions, the principle reason is the defined elements of the assignment. Site value does not change seasonally in a professional context. Using more comparables is a methodological difference, not the fundamental reason. Exam tip: Value is not an absolute number. Always note: Value of what (interest), to whom, for what purpose, as of when, and under what conditions?
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?
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?
An appraiser is valuing undeveloped land intended for a 40-lot subdivision. Market data indicates strong demand, but the only nearby comparable subdivision sold out in 3 years with steady monthly absorption. The subject site is larger, topographically constrained, and lacks existing infrastructure. Which factor most critically affects the reliability of using the comparable’s absorption rate in the subject’s land residual analysis?
People Also Study
Valuation Principles & Procedures
25% of exam
Property Description & Analysis
20% of exam
Market Analysis & Highest/Best Use
15% of exam
Appraisal Math & Statistics
15% of exam
USPAP (Ethics & Standards)
15% of exam