A building's foundation shows minor settling cracks that have been properly repaired and show no signs of recent movement. This condition represents:
Correct Answer
D) Facts that alone do not show incurability or a particular loss
A repaired crack with no observed current movement does not establish a present structural deficiency, zero market effect or incurable deterioration. Verify relevant repair and technical information and buyer response as needed. Economic curability requires appropriate cost and benefit evidence.
Why This Is the Correct Answer
Option D is correct because properly repaired settling cracks with no sign of recent movement do not, on their own, show incurable deterioration or any particular loss. The appraiser should review relevant repair or technical information and consider how buyers respond. Whether an item is curable depends on comparing the cost to cure with the benefit, which needs evidence.
Why the Other Options Are Wrong
Option A: Functional obsolescence that the repaired cracks have proven
Option A calls this functional obsolescence that the repaired cracks have proven. Settling cracks relate to the physical condition of the structure, not to a design deficiency, and repaired cracks do not prove a functional loss.
Option B: A curable item, since foundation issues are curable
Option B says it is a curable item since foundation issues are curable. Curability is not decided by the type of issue; it depends on whether the cost to correct is less than the economic benefit, which has not been shown.
Option C: No value effect at all, since completed repairs prove that
Option C says there is no value effect at all because completed repairs prove that. Repairs reduce concern but do not prove zero market effect, since buyers may still react to a history of settlement.
Repaired is not resolved
A repaired crack tells you something was fixed, not what it is worth. Value effect and curability still need evidence.
How to use: Use this phrase when a question offers a firm conclusion from limited condition facts.
Exam Tip
Be cautious of options that draw a firm conclusion such as zero effect or incurable from a single fact. The better answer usually recognizes what the facts do and do not show.
Common Mistakes to Avoid
- -Treating repaired cracks as proof of no value effect
- -Labeling settlement as functional obsolescence
- -Assuming foundation issues are curable or incurable by category rather than by cost and benefit
Concept Deep Dive
Analysis
This question tests avoiding overconclusions from limited physical evidence. Repaired settling cracks with no recent movement do not by themselves prove a structural deficiency, an incurable condition, a functional problem or zero market effect. The appraiser should gather relevant repair information and consider buyer response before concluding.
Background Knowledge
Physical deterioration is curable when the cost to correct it is less than the resulting economic benefit, and incurable otherwise. Lender guidelines call for the appraiser to comment on the effect of abnormal settlement on value and marketability when it is evident. Appraisers are not engineers, so they rely on qualified information when structural questions arise.
Real-World Application
An appraiser sees patched foundation cracks in a basement and the seller provides a contractor's repair invoice. She notes the condition, reviews the documentation, and checks whether comparable sales with repaired settlement sold at a discount before deciding on any adjustment.
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