COURSE 101 REVIEW CHAPT 3

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The cost approach is premised primarily on the principle of __________, which states that an informed buyer will not pay more to build a property than the cost of a similar property with equal utility.

Supply and demand

Anticipation

Substitution (correct)

Contribution

Costs that occur on the construction site are considered __________ costs.

Indirect

Direct (correct)

Soft

Overhead

The first step in the cost approach is to __________.

Estimate the land (site) value as if vacant and available for development to its highest and best use (correct)

Determine the cost of constructing the building, considering modern materials and current construction practices

Calculate the amount of depreciation accumulated over time, accounting for physical, functional, and external factors

Estimate the income that could be generated by the property, including rental income and other potential revenue sources

Building A contains 10,000 square feet and is 130' x 100'. Building B contains 10,000 square feet and is 50' x 200'. Will it cost more to build Building A or Building B?

Building B Signup and view all the answers

Architectural fees, insurance, and title expenses are considered __________ and are sometimes called soft costs.

Indirect costs Signup and view all the answers

__________ is the cost of producing an exact replica of a building or improvement.

Reproduction cost Signup and view all the answers

__________ is the cost of producing a building or improvement using modern methods and materials with the same utility.

Replacement cost Signup and view all the answers

Building A was constructed 20 years ago at a cost of $400,000. The index 20 years ago was 200, and the current index is 350. The reproduction cost new for Building A would be $________.

$700,000 Signup and view all the answers

Cost components such as the floor or roofing are considered __________ costs and are expressed as cost per square foot.

Direct Signup and view all the answers

The easiest, fastest, and most widely used method of estimating cost is the _______________ method.

Comparative-unit Signup and view all the answers

The comparative-unit method is the easiest, fastest, and most widely used method of estimating costs by applying a cost per unit of area or volume.

All of the above Signup and view all the answers

The difference between the market value of an improvement and its cost at the time of appraisal is termed __________.

Depreciation Signup and view all the answers

The five methods of measuring depreciation are:

Sales comparison method, Capitalization of income method, Economic age-life method, Modified economic age-life method, Observed condition (breakdown) method Signup and view all the answers

Property B sold for $180,000 with an estimated land value of $80,000. The RCN for the improvement is $200,000. Depreciation is _______ percent.

50% Signup and view all the answers

Curable physical deterioration is measured by __________.

The cost to cure the defect Signup and view all the answers

__________ obsolescence is a loss in value due to a deficiency, modernization, or super adequacy within the structure.

Functional Signup and view all the answers

___________ obsolescence is a loss in value resulting from a decrease in utility and desirability caused by factors outside the property's boundaries.

External Signup and view all the answers

Incurable physical deterioration is measured by the ___________.

Remaining useful life Signup and view all the answers

If a depreciation table started at 0 percent and went to 40 percent, a percent good table would start at _ and go to _.

100% to 60% Signup and view all the answers

Which method of estimating depreciation is the most detailed? Its use is required in the writing of demonstration appraisal reports.

Observed condition (breakdown) method Signup and view all the answers

An item classified as a short-lived item has a cost new of $5,000. Its actual age is 5 years, and its total useful life is 20 years. The dollar amount of depreciation would be ________.

$1,250 Signup and view all the answers

A two-story residence has only one bath, which is located on the second floor. If a second bath had been included on the first floor when the residence was originally constructed, the RCN would be $11,500. The cost to install (cure) the second bath today would be $13,500. The amount of functional obsolescence would be ________.

$2,000 Signup and view all the answers

A residence is located on a street that has become a very busy thoroughfare. It rents for $800 per month. Residences not located on the busy street rent for $825 per month. The ORM for this area is 150, and the land-to-building ratio is 1:4. The indicated amount of external obsolescence is ________.

$3,750 Signup and view all the answers

A residence has an RCN of $200,000. Items classified as curable physical deterioration have an RCN of $10,000 and a cost to cure of $12,000. Incurable physical deterioration (short-lived items) have an RCN of $40,000 and a depreciation amount of $18,000. The actual age for the residence is 6 years, and the total useful life is 60 years. The total amount of physical deterioration for the residence would be $_______.

$32,000 Signup and view all the answers

If the cost to cure a functional deficiency within a residence exceeds the increase in value added to the property, it is called ____________ functional obsolescence.

Incurable Signup and view all the answers

COURSE 101 REVIEW CHAPT 3

Podcast Beta

Questions and Answers

The cost approach is premised primarily on the principle of __________, which states that an informed buyer will not pay more to build a property than the cost of a similar property with equal utility.

Costs that occur on the construction site are considered __________ costs.

The first step in the cost approach is to __________.

Building A contains 10,000 square feet and is 130' x 100'. Building B contains 10,000 square feet and is 50' x 200'. Will it cost more to build Building A or Building B?

Architectural fees, insurance, and title expenses are considered __________ and are sometimes called soft costs.

__________ is the cost of producing an exact replica of a building or improvement.

__________ is the cost of producing a building or improvement using modern methods and materials with the same utility.

Building A was constructed 20 years ago at a cost of $400,000. The index 20 years ago was 200, and the current index is 350. The reproduction cost new for Building A would be $________.

Cost components such as the floor or roofing are considered __________ costs and are expressed as cost per square foot.

The easiest, fastest, and most widely used method of estimating cost is the _______________ method.

The comparative-unit method is the easiest, fastest, and most widely used method of estimating costs by applying a cost per unit of area or volume.

The difference between the market value of an improvement and its cost at the time of appraisal is termed __________.

The five methods of measuring depreciation are:

Property B sold for $180,000 with an estimated land value of $80,000. The RCN for the improvement is $200,000. Depreciation is _______ percent.

Curable physical deterioration is measured by __________.

__________ obsolescence is a loss in value due to a deficiency, modernization, or super adequacy within the structure.

___________ obsolescence is a loss in value resulting from a decrease in utility and desirability caused by factors outside the property's boundaries.

Incurable physical deterioration is measured by the ___________.

If a depreciation table started at 0 percent and went to 40 percent, a percent good table would start at _ and go to _.

Which method of estimating depreciation is the most detailed? Its use is required in the writing of demonstration appraisal reports.

An item classified as a short-lived item has a cost new of $5,000. Its actual age is 5 years, and its total useful life is 20 years. The dollar amount of depreciation would be ________.

A residence is located on a street that has become a very busy thoroughfare. It rents for $800 per month. Residences not located on the busy street rent for $825 per month. The ORM for this area is 150, and the land-to-building ratio is 1:4. The indicated amount of external obsolescence is ________.

If the cost to cure a functional deficiency within a residence exceeds the increase in value added to the property, it is called ____________ functional obsolescence.

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COURSE 101 REVIEW CHAPT 3

Podcast Beta

Questions and Answers

The cost approach is premised primarily on the principle of __________, which states that an informed buyer will not pay more to build a property than the cost of a similar property with equal utility.

Costs that occur on the construction site are considered __________ costs.

The first step in the cost approach is to __________.

Building A contains 10,000 square feet and is 130' x 100'. Building B contains 10,000 square feet and is 50' x 200'. Will it cost more to build Building A or Building B?

Architectural fees, insurance, and title expenses are considered __________ and are sometimes called soft costs.

__________ is the cost of producing an exact replica of a building or improvement.

__________ is the cost of producing a building or improvement using modern methods and materials with the same utility.

Building A was constructed 20 years ago at a cost of $400,000. The index 20 years ago was 200, and the current index is 350. The reproduction cost new for Building A would be $________.

Cost components such as the floor or roofing are considered __________ costs and are expressed as cost per square foot.

The easiest, fastest, and most widely used method of estimating cost is the _______________ method.

The comparative-unit method is the easiest, fastest, and most widely used method of estimating costs by applying a cost per unit of area or volume.

The difference between the market value of an improvement and its cost at the time of appraisal is termed __________.

The five methods of measuring depreciation are:

Property B sold for $180,000 with an estimated land value of $80,000. The RCN for the improvement is $200,000. Depreciation is _______ percent.

Curable physical deterioration is measured by __________.

__________ obsolescence is a loss in value due to a deficiency, modernization, or super adequacy within the structure.

___________ obsolescence is a loss in value resulting from a decrease in utility and desirability caused by factors outside the property's boundaries.

Incurable physical deterioration is measured by the ___________.

If a depreciation table started at 0 percent and went to 40 percent, a percent good table would start at _______ and go to _______.

Which method of estimating depreciation is the most detailed? Its use is required in the writing of demonstration appraisal reports.

An item classified as a short-lived item has a cost new of $5,000. Its actual age is 5 years, and its total useful life is 20 years. The dollar amount of depreciation would be ________.

If the cost to cure a functional deficiency within a residence exceeds the increase in value added to the property, it is called ____________ functional obsolescence.

More Like This

Property Valuation I: Sale Comparison and Cost Approach

Real Estate Valuation

Real Estate Appraisal Chapter 19 Quiz

If a depreciation table started at 0 percent and went to 40 percent, a percent good table would start at _ and go to _.