True or False: Estimating site value using three or four land sales and averaging their sale prices is an acceptable practice.

• A. True
• B. False
• C. Sometimes true
• D. Not applicable

Answer: (B)

Estimating site value requires isolating the land component from comparable sales and converting those prices to a common unit before making adjustments. Simply using three or four land sales and averaging their sale prices treats each sale as if its price reflects only site value, ignoring important differences in size, shape, topography, access, zoning, utilities, and other site characteristics. In practice you compare on a common basis (like price per acre or per square foot) and adjust for all those differences to reflect how the subject site differs from each comparable. Only after isolating the land value and harmonizing the comparables do you reconcile to a credible estimate. A straight average of raw sale prices would misstate value because it doesn’t account for factors that influence price beyond the pure value of the land.