APPRAISAL CHP 10

Question 1

Which is NOT necessary to perform the cost approach?
a. depreciation
b. replacement or reproduction cost data
c. site value
d. matched pair data

Answer 1

d. matched pair data

Question 2

Depreciation is
a. always the result of external obsolescence.
b. always the result of functional obsolescence.
c. always the result of physical deterioration.
d. a loss in value for any reason.

Answer 2

d. a loss in value for any reason.

Question 3

The cost approach is NOT the most applicable method for
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 no comparable sales available.

Answer 3

c. a residential condo in a complex with 50% occupancy and many recent sales.

Question 4

____cost is more commonly used because ____

a. Replacement / most of the time, a similar building is an acceptable, less expensive alternative.
b. Replacement/people are always interested in replacing a damaged home with one that is exactly like their old one.
c. Reproduction/most of the time, a similar building is an acceptable, less expensive alternative.
d. Reproduction / people are always interested in replacing a damaged home with one that is exactly like their old one.

Answer 4

a. Replacement / most of the time, a similar building is an acceptable, less expensive alternative.

Question 5

Which is the most important consideration in developing the cost approach?
a. a building’s actual age
b. a building’s effective age
c. both a and b
d. neither a nor b

Answer 5

b. a building’s effective age

Question 6

Age life depreciation takes the ___ and divides by the____ of a building to arrive at a depreciation percentage
a. economic life / effective age
b. economic life / actual age
c. effective age / economic life
d. actual age / economic life

Answer 6

c. effective age / economic life

Question 7

Severe structural damage to a basement and foundation would likely be considered
a. curable functional obsolescence.
b. curable physical deterioration.
C. incurable external obsolescence.
d. incurable physical deterioration.

Answer 7

d. incurable physical deterioration.

Question 8

External obsolescence is
a. related to things outside the property boundaries.
b. always curable.
c. always the same as functional obsolescence.
d. related to something on the exterior of the home.

Answer 8

a. related to things outside the property boundaries.

Question 9

A house with a poor floor plan that would be very difficult and costly to change would likely suffer from
a. curable external obsolescence.
b. curable functional obsolescence.
c. incurable external obsolescence.
d. incurable functional obsolescence.

Answer 9

d. incurable functional obsolescence.

Question 10

How does the appraiser determine the appropriate weight to be given to the cost approach?

a. The appraiser always uses the cost approach as supporting evidence for the other appraisal methods.

b. The appraiser considers what the purpose of the appraisal is before deciding how much weight to give the cost approach.

c. If the figure for the cost approach is very different from the other figures, the appraiser uses a weighted average to bring it in line.

d. If the figures for the cost approach and the sales comparison approach come out very different, the appraiser knows not to give the cost approach much weight.

Answer 10

b. The appraiser considers what the purpose of the appraisal is before deciding how much weight to give the cost approach.