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APPRAISAL - Chapter 10 questions with actual answers.
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APPRAISAL - Chapter 10 questions with actual answers.
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APPRAISAL - Chapter 10 questions withactual answers.
COST APPROACH ANS - An appraisal method that develops an indication of the value of real property
by figuring the cost of building the house or other improvement on the land, minus(-) depreciation, plus
(+) the value of the vacant land.
Typically used for new construction, for the replacement cost for a building, or for buildings that are
unusual, with few comparable sales.
When Cost Approach is applicable, an appraiser must: ANS - -Develop an opinion of site value by an
appropriate method
-Analyze such comparable cost data as are available to estimate the cost new of the improvements
-Analyze such comparable cost data as are available to estimate the difference between cost new and
the present worth of the improvements (accrued depreciation)
REPLACEMENT ANS - Building the functional equivalent (substitute) of the original building using
modern materials, methods, and design
REPRODUCTION ANS - Building an exact duplicate (replica) of the original building
Typically done for historical buildings
Common Cost Approach Methods Are: ANS - -Square foot measure
-Comparative unit method
-Quantity survey method
-Unit-in-place method
-Index method
, SQUARE FOOT METHOD ANS - Typical method for determining the cost of replacing a building. Relies
on cost manuals that detail the "per square foot" cost new of specific building types.
COMPARATIVE UNIT METHOD ANS - Uses the cost of recently built comparable structures, using
recently constructed buildings as a basis for estimating the cost of replacing the subject property.
Favored by many appraisers
QUANTITY SURVEY METHOD ANS - The most detailed of the cost approaches because it requires a
thorough itemization of every building component used.
Duplicates the process a contractor goes through when determining a bid for a contract.
Detail involved but considered the most accurate
UNIT-IN-PLACE METHOD ANS - Estimates the cost of reproducing a building by looking at the unit cost
of each of the structure's component parts, and adding all of these unit costs together based on actual
need and usage.
looks at each building component (electrical, plumbing, framing, roofing)
INDEX METHOD ANS - Estimates the cost of a building by taking its original cost and multiplying that
number by an index factor, based on when the building was originally constructed.
Quiz
The cost approach is NOT the most applicable method for ANS - a. determining an insurance
replacement value
b. a recently constructed building
c. a residential condo in a complex with 50% occupancy and many recent sales
d. an unusual building for which there are not comparable sales available.
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