AG Site & Cost: Calculations Flashcards
If the land capitalization rate for retail is 0.060 and for office is 0.055, what is the highest and best use of the site?
An appraiser is determining the highest and best use of a vacant
site. Information concerning the two uses that pass the tests of
legal permissibility, physical possibility, and financial feasibility are as follows:
Office use is the highest and best use of the vacant site.
3.10 Problem, solutions page 18
A three-story building contains 5,000 square feet per floor. It is located on a 30,000-square-foot site. What is the site coverage ratio?
16.7%
5,000 sq. ft. / 30,000 sq. ft.
solutions page 22
The asking price for an improved property is $875,000. The site value, if vacant, is $810,000. Demolition costs are estimated at $45,000. What can a buyer afford to pay for the property?
$765,000
$810,000 − $45,000
solutions page 21
A four-story building contains 20,000 square feet per floor. It is located on a 55,000-square-foot site. What is the floor area ratio (FAR)?
1.45:1
80,000 sq. ft. / 55,000 sq. ft.
solutions page 23
80,000 : 55,000
X : 1 (because the area is fix)
What is the land-to-building ratio mandated by the zoning regulations?
Given info:
8 ac subject site area
Total required site area
GBA
Total required site area/GBA
solutions page 20
What is the appropriate amount of area for the subject development?
Given info:
Land-to-building ratio: 4: 1
Subject area 8 ac
GBA 100,000 sf
Required site area 316,500 sf
4 × 100,000 sq. ft. of GBA = 400,000 sq. ft
solutions page 20
What is the size of the building that should be built on a 8-acre site?
Given info:
Land-to-building ratio: 4: 1
Subject area 8 ac
GBA 100,000 sf
Required site area 316,500 sf
= 87,120 sq. ft. of building area
(8 acres × 43,560 sq. ft./acre) / 4
solutions page 20
The value of an improved property is $675,000. The value of the site, if vacant, is $525,000. Demolition costs are estimated at $170,000. What is the current highest and best use of the property?
A. conversion of the existing improvements into an alternate use
B. demolition of the improvements and redevelopment of the site
C. existing use
D. renovation of the improvements
C. existing use
Self-Study page 39
A typical ratio of site value to property value in the subject neighborhood is 1:5. What site value is indicated for a nearby property that recently sold for $550,000?
$110,000
=$550,000 / 5
Self-Study page 36
The site-to-property value ratio is 1:5, meaning the site value represents 1 part out of a total of 5 parts (where the property value is the entire 5 parts).
This division by 5 reflects that the total property value includes both the site and other improvements, with the site being 1 part of the overall 5-part ratio.
A typical ratio of site value to building value in the subject neighborhood is 1:4. What site value is indicated for a nearby property that recently sold for $400,000?
$80,000
=$400,000 / 5
Self Study page 36
Total ratio parts = 1 (site) + 4 (building) = 5 parts.
Given that the site-to-building ratio is 1:4, the $400,000 sale price of the property represents the combined value of both the site and the building. To separate them based on this ratio, you want to think of the site value as one part and the building value as four parts, totaling five parts.
Which of the following is an example of an element of comparison?
conditions of sale
price per acre
price per floor area ratio
price per front foot
conditions of sale
self study page 44
A typical ratio of site value to building value in the subject’s neighborhood is 2:5. What site value is indicated for a competitive property that recently sold for $2,310,000?
$660,000
$2,310,000 × 2 / 7
Self-study page 49
A property sold 18 months ago for $450,000 and again three months ago for $517,500. What was the annual rate of appreciation on a straight line basis?
12%
Solutions page 37
18 mo =$450,000
3 mo = $517,500
15 mo = $67,500
12 mo = x = $54,000
450,000 = 100%
$54,000 = x = 12%
A site measuring 100 feet by 150 feet recently sold for $350,000. It can be developed to a FAR of 1.5:1. The maximum size building that can be constructed on the site is
22,500 sf
15,000 sf = $350,000
1.5 : 1
x : 15,000 sf (15,000 x 1.5)
x = 22,500
A square parcel of land sold for $960,000, or $500 per front foot. What was the
size of the parcel of land (in acres)?
84.63 acres ($960,000 / $500 per front foot = 1,920 front feet. Then 1,920 front feet × 1,920 feet of depth / 43,560 sq. ft. per acre = 84.63 acres)
solutions page 46
A property is currently under contract for $600,000. The contract was executed two years ago, but the closing was extended due to title issues unknown to either party to the transaction at the time of sale. The closing is expected to occur
one year from now. If property values have been appreciating at a rate of 1% per month on a straight-line basis, what is the current adjusted contract price?
$744,000
$600,000 × 1.24, adjusts for two years
solutions page 46
Site Area = 115,385 SF
Net Floor Area = 49,300 SF
Usable Area = 51,400 SF
Office = 4,400 SF
GBA = 59,400 SF
What is the finished office space ratio?
GBA 59,400 SF = 100%
Office 4,400 SF = X
4,400 square feet / 59,400 square feet
= 0.0741, or 7.4%
Solutions page 60
An office building has a usable area per floor of 6,500 square feet. The rentable area is 8,000 square feet and the gross floor area is 10,500 square feet. What is the efficiency ratio?
76%
10,500 = 100%
8,000 = x
8,000 sq. ft. / 10,500 sq. ft.
= 0.7619, or 76%
Solutions page 61
An office building has a usable area per floor of 7,500 square feet. The rentable area is 8,500 square feet and the gross floor area is 9,500 square feet. What is the usable/rentable ratio to the nearest percent?
88%
8,500 = 100%
7,500 = x
7,500 sq. ft. / 8,500 sq. ft. = 0.8824, or 88%
Solutions page 61
A new retail shopping center recently sold for $3,600,000. Direct costs were $1,855,400 and indirect costs were $685,000. If the site cost was $625,000, what is the entrepreneurial profit?
$434,600
$3,600,000-$1,855,400-$685,000-$625,000
solutions page 86
A national cost service indicated a base cost of $86.30 per square foot for a commercial building as of 18 months ago. The required multipliers are 12.5% for time (changing market conditions), 0.92 for location, and 1.10 for its irregular perimeter. What is the adjusted base cost?
$98.25
$86.30/sq. ft. × 1.125 × 0.92 × 1.10
solutions page 86
A new office building recently sold for $2,900,000. The site cost was $650,000, and the cost of the site improvements including the parking area is $425,000. The total gross building area is 23,540 square feet. What is the indicated square foot of building cost including entrepreneurial profit?
$77.53
$2,900,000 − $650,000 − $425,000 = $1,825,000. Then
$1,825,000 / 23,540 sq. ft.
Solutions page 86
A new shopping center recently sold for $5,500,000. The building is 35,000 square feet and is located on a 125,000-square-foot site. Land value is estimated at $10.00 per square foot and building costs are $87.50 per square foot. The total site improvement costs were $636,250. What was the entrepreneurial profit as a percent of the building cost?
18%
$5,500,000
− $3,062,500
− $1,250,000
− $636,250
=$551,250
$551,250 = x
$3,062,500 = 100%
$551,250 / $3,062,500
Solutions page 87
The subject is a building that has a current construction cost of $786,500. The site value is $245,000. The market indicates that the typical total economic life of a building of this type is 50 years. The effective and actual age of the building is 26 years.
What is the value of the property?
Current construction cost $786,500
Effective age / economic life (26 / 50) × 0.52
Total depreciation (rounded) ($408,980)
Current construction cost $786,500
Less depreciation $408,980
Depreciated value of improvements $377,520
Plus site value $245,000
Indicated value by cost approach $622,520
Rounded to $622,500
Solutions page 97
The subject is a retail commercial property that has a site value
of $750,000. The current construction cost of the building
improvements is $3,248,250. The cost to cure deferred
maintenance and curable functional obsolescence is $25,750. After
all curable items are addressed, the estimated total economic life of the building is 45 years and its effective age is 9 years.
What is the value of the property?
Current construction cost $3,248,250
Less physical and functional curable items 25,750
Remaining undepreciated cost $3,222,500
Total economic life 45 years
Remaining economic life 36 years
Effective age 9 years
Ratio applied to cost: 9 / 45 = 0.20
Less incurable items 644,500
Depreciated value of improvements $2,578,000
Plus site value 750,000
Value indicated by cost approach $3,328,000
Solutions page 98
Modified Age-Life Method
