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02 Basic App Proc Quiz > Ch 5 Quiz > Flashcards

Ch 5 Quiz Flashcards

1
Q

Which would be an example of a direct cost when constructing a building?

A

building permit

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2
Q

True or False: Cost estimating services do not include an allowance for entrepreneurial profit or incentive.

A

TRUE

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3
Q

You examine a construction contract to build a 1,448 square foot house and the total cost is $197,450. What was the cost per square foot?

A

136.36

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4
Q

The most popular cost service among residential appraisers is

A

Marshall & Swift

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5
Q

True or False: Fee simple ownership is not subject to the governmental powers of police power and escheat.

A

FALSE

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6
Q

Direct costs are also called

A

hard costs

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7
Q

Which would NOT be a typical source of building costs for an appraiser?

A

the property owner. he property owner would not be a reliable source.

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8
Q

Which type of cost new would replicate a slate roof and a steam heating system in a 100-year-old home?

A

reproduction cost

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9
Q

After an appraiser estimates cost new, he/she subtracts ____________ then adds _______________ to arrive at an indicated value by cost approach.

A

depreciation, site value.

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10
Q

“Expenditures for the labor and materials used in the construction of improvements” is the definition of

A

direct costs

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11
Q

Financing costs and marketing costs necessary to achieve occupancy are examples of ____________ costs.

A

indirect

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12
Q

The simplest, quickest, and least accurate method of estimating costs is the ______________ method.

A

comparative-unit

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13
Q

A rectangular-shaped two-story home measures 28 feet by 40 feet. How many lineal feet are there in the foundation?

A

136

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14
Q

Of the traditional methods of cost estimating, the least complicated and least accurate method is the _________ method.

A

comparative-unit

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15
Q

Which of these is NOT one of the traditional cost estimating methods?

A

direct-indirect

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16
Q

The most common unit of construction cost in residential properties is cost per

A

square foot

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17
Q

Appraisal, accounting and legal fees are examples of ____________ costs.

A

indirect

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18
Q

The cost approach is primarily based on which valuation principle?

A

substitution

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19
Q

Most fire and casualty insurance is written to pay an amount equal to the _______________ cost of the structure.

A

replacement

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20
Q

True or False: If appraising something other than fee simple interest, an appraiser can make an adjustment to the indicated value by cost approach in order to reflect the value of the property interest being appraised.

A

TRUE

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21
Q

When is an appraiser required by USPAP to develop the cost approach?

A

whenever it is necessary to produce credible assignment results

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22
Q

Which of these would be considered an indirect cost when constructing an office building?

A

lease-up costs to achieve occupancy

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23
Q

The unit-in-place method is sometimes called the ____________ method.

A

segregated cost

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24
Q

Unless adjustments are made for ownership interest, the cost approach will indicate the value of the ___________ interest.

A

fee simple

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25
Q

A property has a cost new of $345,000, site value of $90,000, and accrued depreciation of $75,000. What is its value by the cost approach?

A

360000

26
Q

Fannie Mae says the cost approach _______________.

A

is optional. USPAP Obligations. Fannie Mae says it is optional – but you can always do it anyway; or certainly, when it is necessary for credible results.

27
Q

The basic principle underlying the cost approach is the principle of ___________.

A

substitution

28
Q

A 2,800 square foot new home recently sold for $660,000. The site value was $180,000. What was the indicated cost per square foot of the home?

A

171.43

29
Q

You are using the Marshall & Swift Residential Cost Handbook to estimate the cost new of a home built in the early 1900s. What should you do?

A

go to the Old Residence pages in the book

30
Q

Which of the following are the two major cost estimating services?

A

Marshall & Swift and RS Means Company, Inc.

31
Q

The estimated cost to construct an exact duplicate or replica of the property being appraised, using the same materials, and embodying all the obsolescence of the subject building, is _______________ cost.

A

reproduction

32
Q

The oldest of the three traditional appraisal approaches is the _________ approach.

A

cost

33
Q

In producing a cost estimate, Derek has estimated the number of 2x4s, sheets of plywood, and how many pounds of nails would be necessary to construct the home. What cost estimating method has he employed?

A

quantity survey

34
Q

When ____________ cost is used, it eliminates any functional obsolescence that may be present in the structure.

A

replacement

35
Q

An example of a special purpose property is a ____________.

A

school building

36
Q

You are performing the cost approach on an old house. You use a cost manual to estimate the current cost of constructing a similar structure, using modern materials. Which type of cost have you estimated?

A

Replacement cost

37
Q

“A loss in value from any cause” is the definition of what appraisal term?

A

Depreciation

38
Q

_______________ is defined as “a loss in property value from any cause.”

A

Depreciation

39
Q

You read a construction contract for a new house and its cost is $675,330. It has 3,150 square feet. What is its construction cost per square foot?

A

214.39

40
Q

When a published cost manual is used, the result is ____________ cost.

A

replacement

41
Q

The cost to produce “an exact duplicate or replica of the building being appraised” is called _____________ cost.

A

reproduction

42
Q

Another name for soft costs is ________.

A

indirect costs

43
Q

The estimated cost to construct, at current prices as of a specific date, a substitute for a building or other improvements, using modern materials and current standards, design, and layout, is _______________ cost.

A

replacement

44
Q

A building was constructed in August 1999 for $2,340,000. The cost index at that time was 192.3. The current cost index is 302.1. What is the indicated cost new of the building today? (Round the index to 2 decimal places)

A
  1. 302.1 ÷ 192.3 = 1.57. $2,340,000 X 1.57 = $3,673,800.
45
Q

Contractor’s overhead and profit is an example of ____________ cost.

A

direct

46
Q

True or False: Most appraisers do not possess the level of expertise needed to apply the quantity survey method of cost estimating.

A

TRUE

47
Q

The cost approach has good applicability when the improvements we are appraising are _________________.

A

new or relatively new

48
Q

With Marshall & Swift, you can produce a cost estimate using the

A

comparative unit or unit-in-place method

49
Q

Which of these is the best example of a special purpose property?

A

Church

50
Q

A house contains 2,312 square feet. It was constructed in 2009 at a cost of $72.32 per SF. The cost index at that time was 201.4 and the cost index today is 265.8. What is the estimated cost to build the building today? (Round the index to 2 decimal places)

A
  1. 2,312 X $72.32 = $167,204. 265.8 ÷ 201.4 = 1.32. $167,204 X 1.32 = $220,709.
51
Q

If a property is older or exhibits unusual construction, then perhaps the more accurate method would be to use _______________ cost.

A

reproduction

52
Q

True or False: The cost approach is most applicable in situations where the site value is not well-supported.

A

FALSE

53
Q

A 2,800 square foot new home recently sold for $660,000. The site value was $180,000. The subject home has 2,945 square feet. What was the indicated cost of the subject home?

A

504861

54
Q

A building was constructed in September 2008 for $872,500. The cost index at that time was 174.6. The current cost index is 222.9. What is the indicated cost new of the building today? (Round the index to 2 decimal places)

A
  1. 222.9 ÷ 174.6 = 1.28. $872,500 X 1.28 = $1,116,800.
55
Q

The most comprehensive and accurate method of cost estimating is the ___________ method.

A

quantity survey

56
Q

The basic cost approach formula is reproduction or replacement cost new, ___________________, __________________, = property value.

A

– accrued depreciation, + site value

57
Q

The one universal approach that can be applied to any kind of improved real property is the _______________ approach.

A

cost. Yes, no matter what, you can always do a cost approach. It is the one universal approach that can be applied to any kind of real property. In some cases, it may not be the best approach or the most supportable opinion of value - but one can always do a cost approach. This explanation assumes that the property is improved with building and site improvements. A parcel of unimproved land would, obviously, not be appraised using a cost approach as there is nothing to “cost estimate” on the subject.

58
Q

“The estimated cost to construct, at current prices as of a specific date, a substitute for a building or other improvements, using modern materials and current standards, design, and layout” is the definition of

A

replacement cost

59
Q

The cost approach would likely be MOST applicable in a situation where

A

the subject is a special purpose property

60
Q

True or False: If the sales comparison approach cannot be developed because of a lack of sales data, the cost approach cannot be developed either.

A

FALSE

61
Q

The difference between the cost of an improvement and its market value on the effective date of the appraisal is

A

depreciation

62
Q

When using Marshall & Swift, adjustments need to be made for construction costs in various locations of the country. This is accomplished through use of

A

local multipliers

02 Basic App Proc Quiz (21 decks)

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