COURSE 101 REVIEW CHAPT 3

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 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 ________.

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 ________.

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 $_______.

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.