Appraisal - Cost Approach

Question 1

Termite damage

Answer 1

Physical deterioration

Question 2

Depreciation: Age-Life Method

Answer 2

Effective Age/Total Economic Life

Question 3

Quantitative Survey Method

Answer 3

estimate the cost of improvement; present the most time and greatest detail

Question 4

Depreciation: Breakdown Method

Answer 4

一樣樣計

Physical deterioration + functional obsolescence + external obsolescence + cost to cure physical damage

Question 5

Incurable Cost

Answer 5

Subtract the curable items from the Cost New

Question 6

Depreciation

Answer 6

Curable + Incurable

Question 7

Reproduction Cost

Answer 7

Exact replica including deficiency and super adequacy (any functional obsolesce depreciation must considered)

Question 8

Replacement Cost

Answer 8

Functional Equivalent

Do not include depreciation and “as is” value of site improvement, just add up the cost!

Question 9

Entrepreneurial Profi

Answer 9

The reward associates with the risk involved in a real estate project

Question 10

Unit in Place

Answer 10

The method widely used by contractors that entails the cost addition of all major building component

Question 11

Accrued depreciation

Answer 11

the difference between an improvement’s cost new and its contribution to market value as of the date of appraisal;
-Market Extraction - Age/Life - Breakdown

Question 12

Value

Answer 12

Site Value + Reproduction Cost New Improvement
or
Estimated site value + Depreciated cost new

Question 13

Straight-line depreciation

Answer 13

i.e. economic life = 80 years = 100%/80 = 1/80= 0.0125= 1.25% depreciation per year

Question 14

Curable Item

Answer 14

The cost to cure is equal to or less than the contributory value. As long as the increase in contributory value is greater than the costs to replace, repair, or correct the problem, the problem is deemed curable

Question 15

External Obsolescence

Answer 15

It is most often incurable

Deals with a loss in the building’s value

Question 16

Replacement Cost

Answer 16

Methods
Comparative-Unit
Quantity Survey
Unit-In-Place

Question 17

Cost Approach

Answer 17

Is most applicable for..

• special use properties
• when improvement are relatively new
• limited amount of accrued depreciation

Question 18

Depreciation

Answer 18

Loss in value of the “as is” condition of the subject structure when compared to a new one

Question 19

Determine Weight of Cost Approach

Answer 19

Scope of Work

Question 20

Depreciation - Market Extraction

Answer 20

Most preferred

Question 21

Depreciation - Physical Obsolescence

Modified Age/Life

Answer 21

Curable + Incurable vs. effective age

1. Calculate Cost New
2. Curable Cost (stated)
3. Incurable Cost = (Cost New - Curable Cost ) x incurable depreciation rate (effective age/total economic life)
4. Total Depreciation = Curable + Incurable Depreciation
5. Total Deprecation % = Total Depreciation/Cost New

Question 22

Cost Multiplier

Answer 22

multiply by replacement cost only, do not multiply by land cost

Question 23

Direct Cost

Answer 23

Relate directly to the property itself in regards to CONSTRUCTION

Question 24

Index Factor

Answer 24

Cost of building = Original cost x Index Factor

Question 25

Fiscal Policy

Answer 25

The management of government receipts and expenditures

政府財政收入

Question 26

Monetary Policy

Answer 26

Federal Reserve, interest rate

貨幣供應控制

Question 27

Depreciation of Land

Answer 27

Land never depreciated! 0.00

Question 28

Depreciation %

Answer 28

curable depreciation + incurable depreciation (derived from cost new - curable x )

Question 29

Sf/$ scale

Answer 29

smaller in a larger place

Question 30

Cost New

Answer 30

Improvement

Do not include depreciation

Question 31

Curable Functional Depreciation

Answer 31

Cost to remove superadequect item - salvage cost + cost to insall