30 Questions
The cost of producing a building or structure having the same utility but using modern materials, design, and workmanship is called:
Replacement cost
When a cost manual is being used, which one of the following components is not included in the inventory of physical characteristics for the building?
Location
The underlying principle in the adjustment process in the sales comparison approach is the Principle of _______________.
Contribution
You are analyzing resales to determine a time adjustment. You have found a sale that sold 18 months ago for $200,000 and sold again 8 months ago for $220,000. Based on this sale, the monthly adjustment for time would be
1%
Which approach to value is premised on the Principle of Substitution?
All of the above
The Principle of ____________ states that market value is never constant because environmental, governmental, social, and economic forces are at work influencing the property and its environment.
Change
Which of the following is not an appropriate unit of comparison when multiple-unit residential properties are being appraised?
Price per cubic foot
The cost of building an exact replica of a building is called:
Reproduction cost
Questions 9 and 10 are based on the following information. The direct costs for a single-family residence containing 1,500 square feet are $80.00 per square foot. Indirect costs are an additional 20 percent of direct costs. The land value is well supported at $50,000. The improvements are 10 years old and have depreciated at the rate of 0.5% per year.
What is the cost new of the improvement?
$144,000
Questions 9 and 10 are based on the following information. The direct costs for a single-family residence containing 1,500 square feet are $80.00 per square foot. Indirect costs are an additional 20 percent of direct costs. The land value is well supported at $50,000. The improvements are 10 years old and have depreciated at the rate of 0.5% per year.
What is the indicated value of the property based on the cost approach?
$186,800
When a direct method of measuring depreciation is used, the loss of value attributable to external obsolescence is measured by:
Capitalizing an actual or estimated rent loss using a GRM, multiplied by the building portion of the land-to-building ratio.
When a property experiences functional obsolescence, it:
Is usually the result of diminished utility within the building
What cost estimation method is considered the most accurate but is also the most time consuming?
Quantity survey method
The first adjustment in the sales comparison approach is:
Financing
The following data are for questions 15, 16, and 17. RCN $368,000 Actual age 20 years Total useful life 80 years RCN: physical curable items $8,800 Total depreciation: physical curable items $10,000 RCN: physical incurable short-lived items $60,000 Total depreciation: physical incurable short-lived items $17,200 Land value $75,000
- What is the amount of depreciation for the physical incurable long-lived items?
$74,800
The following data are for questions 15, 16, and 17. RCN $368,000 Actual age 20 years Total useful life 80 years RCN: physical curable items $8,800 Total depreciation: physical curable items $10,000 RCN: physical incurable short-lived items $60,000 Total depreciation: physical incurable short-lived items $17,200 Land value $75,000
What is the total amount of physical depreciation for the property?
$102,000
The following data are for questions 15, 16, and 17. RCN $368,000 Actual age 20 years Total useful life 80 years RCN: physical curable items $8,800 Total depreciation: physical curable items $10,000 RCN: physical incurable short-lived items $60,000 Total depreciation: physical incurable short-lived items $17,200 Land value $75,000
- What is the indicated value of the property, based on the cost approach?
$341,000
The following data are for questions 18 and 19. You are appraising a single-family residence and have the following data for the subject and four comparables: Item Subject Sale 1 Sale 2 Sale 3 Sale 4 Sale price 1.$360,000 $277,500 $330,000 $310,000 Sale date 10 mo. ago 12 mo. ago 10 mo. ago Current Bathrooms 2 and 1/2 2 and 1/2 1 and 1/2 2 and 1/2 1 and 1/2 Bedrooms 3 4 3 3 3 Den 1 1 None 1 1 Garage stalls 2 2 1 2 1 Market analysis provides the following adjustments: Market conditions (changes over time) 0.5% per month Fourth bedroom $22,000 Full bathroom $12,000 Den $15,000 Single-car garage $18,000 Two-car garage $26,500 18. What is the value range for the comparable sales?
$329,650–$356,000
The following data are for questions 18 and 19. You are appraising a single-family residence and have the following data for the subject and four comparables: Item Subject Sale 1 Sale 2 Sale 3 Sale 4 Sale price 1.$360,000 $277,500 $330,000 $310,000 Sale date 10 mo. ago 12 mo. ago 10 mo. ago Current Bathrooms 2 and 1/2 2 and 1/2 1 and 1/2 2 and 1/2 1 and 1/2 Bedrooms 3 4 3 3 3 Den 1 1 None 1 1 Garage stalls 2 2 1 2 1 Market analysis provides the following adjustments: Market conditions (changes over time) 0.5% per month Fourth bedroom $22,000 Full bathroom $12,000 Den $15,000 Single-car garage $18,000 Two-car garage $26,500
Which sale is the most comparable to the subject property?
Sale 3
When the interaction of supply and demand is being analyzed, which of the following influences demand?
Local services
Which of the following is a method that can be used to determine the adjustments in the sales comparison approach?
All of the above
Which of the following is a situation in which the cost approach is the most applicable in estimating value?
All of the above
Which of the following is not a characteristic of cost?
Land value
Which of the following is not an indirect cost?
Supervision
Which of the following methods of estimating cost is the easiest, fastest, and most widely used method of estimating cost?
Comparative unit
An indirect method of measuring depreciation is the:
Sales comparison method
The electrical outlets in the kitchen of a single-family residence are inadequate. The cost of the existing outlets is $3,600. The depreciation for the outlets is 50 percent. The cost to remove the old outlets and install adequate outlets is $4,600. There is not any salvage value in the old outlets. If adequate outlets had been installed originally, it would have cost $3,800. By installing adequate outlets, the increase in market value of the property will more than offset the cost of the new outlets. What is the amount of depreciation attributable to the electrical outlets in the kitchen?
$2,600
A single-family residence on a busy street rents for $850 per month. Similar residences off of the busy street rent for $900 per month. The GRM for this area is 150. The land-to-building ratio is 1:4. What is the indicated amount of depreciation?
$6,000
What type of depreciation is being calculated in question 29? A. B. C. D.
External obsolescence
What is the type of depreciation being calculated in question 27? A. B. C. D.
Functional curable
Test your knowledge of construction terminology with this quiz. Learn about the cost of producing a building or structure with modern materials, design, and workmanship. Improve your understanding of construction concepts and terminology.
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