Chapter 22 - Comparative and Cost Methods of Appraisal

Question 1

We __________ _______ the sale price of the comparable property when a feature of the comparable property is superior to the subject property.

Answer 1

We subtract from the sale price of the comparable property when a feature of the comparable property is superior to the subject property.

Question 2

Outmoded design that is economically feasible to correct is an example of _______ _________.

Answer 2

Outmoded design that is economically feasible to correct is an example of curable depreciation.

Question 3

What is the objection to using reproduction cost?

Answer 3

What is the objection to using reproduction cost?

Answer:
The objection to using reproduction cost is that it may be impossible to provide an identical reproduction of an older building. Often the materials and equipment used years ago are not available today. If they are available, the specialized labour required may no longer exist, and with changes in construction techniques, designs and tastes also change. Therefore, an exact replica might cost more to construct than its contemporary equivalent, but worth less when finished.

Question 4

Corner lots have a greater value than inside lots.

(1) True
(2) False

Answer 4

Corner lots have a greater value than inside lots.

(1) True
(2) False

Answer:
There will be circumstances in which corner lots will be preferred because they may offer extra light and air. In other cases, they will not achieve higher prices because of the loss of privacy and quietness. If the typical lot frontage is narrow, corner lots have an advantage. If inside lots have what is thought to be an adequate width, the corner lots may not have an advantage. In older neighborhoods, corner lots are often wider than inside lots and frequently have higher value. The appraiser must be guided by their knowledge of an imperfect market since there is no definitive rule to follow.

Question 5

The actual amount of money spent at the time the asset was __________ or the improvements were ________ is known as the historic cost.

Answer 5

The actual amount of money spent at the time the asset was purchased or the improvements were built is known as the historic cost.

Question 6

When a feature of the subject property is __________ to the comparable property, we ADD to the sale price of the comparable property.

Answer 6

When a feature of the subject property is superior to the comparable property, we ADD to the sale price of the comparable property.

Question 7

In appraisal, recent is defined as…

Answer 7

In appraisal, recent is defined as…

Answer:
…that time period just prior to the date of valuation over which the demand and supply conditions have remained relatively stable.

Question 8

In appraisal, two properties are similar if…

Answer 8

In appraisal, two properties are similar if…
Answer:
…the actual differences between the properties will not have a material effect on their selling price.

Question 9

__________ ______ is the cost of providing an exact replica of the subject property, while the __________ ______ is the cost of building a modern equivalent of the subject property.

Answer 9

Reproduction cost is the cost of providing an exact replica of the subject property, while the replacement cost is the cost of building a modern equivalent of the subject property.

Question 10

What is incurable depreciation?

Answer 10

What is incurable depreciation?

Answer:
Incurable depreciation is depreciation caused by wear and tear or outmoded design which can only be corrected at considerable expense and, in fact, correction may be cost-prohibitive (e.g., narrow hallways).