A house has three bedrooms sharing one bathroom, and adding a second bath is economically justified. This is:
Correct Answer
A) A curable functional deficiency
Why this is correct: A curable functional deficiency exists when the cost to correct the deficiency is less than or equal to the value added by the correction, and the correction is economically feasible. Here, adding a second bathroom for three bedrooms is a typical market expectation, and the problem states it is 'economically justified,' meaning the cure adds more value than it costs. Why the other choices are wrong: 'An incurable functional deficiency' would apply if the cost to cure exceeded the value added. 'External obsolescence' originates from outside the property. 'Physical deterioration' refers to wear and tear, not a design flaw. Exam tip: The keyword 'economically justified' signals curability. If the cure 'costs more than it's worth,' it's incurable.
Why This Is the Correct Answer
Option A is right because the deficiency lies in the design of the improvements and the stem states that adding a second bath is economically justified, which satisfies the curability test. The appraiser would therefore measure this item at the cost to cure rather than by estimating a market value differential. Note the practical corollary: because it is curable, the highest and best use analysis of the property as improved should consider whether the cure is part of the most probable course of action for a buyer. Curable items are also the ones a seller can profitably address before listing.
Why the Other Options Are Wrong
Option B: An incurable functional deficiency
An incurable classification requires that the cost to cure exceed the value added, and the stem states the opposite. Incurable functional deficiencies are common in older housing stock - a bedroom reachable only through another bedroom, ceilings too low to raise economically - where correction would cost more than the market returns. Choosing incurable here ignores the one fact the stem supplied to decide the question.
Option C: External obsolescence from market standards
External obsolescence originates beyond the property boundaries and is almost always incurable by the owner, because no amount of spending on this parcel removes a neighboring nuisance or a regional economic decline. A bathroom count is entirely within the improvements. The category is wrong before the curability question is even reached.
Option D: Physical deterioration of the plumbing system
Physical deterioration concerns wear, decay, and the effects of use and weather on materials, and nothing in the stem describes a plumbing system in poor condition. The problem is that there is one bathroom, not that the one bathroom is failing. Adequacy and condition are different axes, and each has its own measurement technique.
Curable means it pays for itself
Curable has nothing to do with whether a contractor can do the work. It means the money comes back. Cost to cure at or below value added means curable, measured at cost. Cost above value added means incurable, measured by what the market takes away.
How to use: Find the sentence in the stem that compares cost against value and let it decide. Phrases like economically justified or the cure adds more than it costs point to curable, while costs more than it returns points to incurable. Then confirm the category is functional rather than physical or external.
Exam Tip
The same curability test governs physical items too, so learn it once and apply it to both physical deterioration and functional obsolescence.
Common Mistakes to Avoid
- -Deciding curability on physical feasibility rather than economics
- -Measuring a curable item by market value loss instead of cost to cure
- -Overlooking excess cost when a retrofit is dearer than original construction
- -Misclassifying an adequacy problem as physical deterioration
Concept Deep Dive
Analysis
This question tests the curability test, which is economic rather than physical. Almost anything can be fixed if enough money is spent, so appraisal does not ask whether a cure is possible - it asks whether the cure pays for itself. An item is curable when the cost to cure is less than or equal to the value the cure adds; it is incurable when correcting it costs more than the market will return. The classification drives measurement. A curable functional deficiency is measured at the cost to cure, sometimes with an excess-cost element where curing after the fact costs more than including the feature during construction. An incurable functional deficiency is measured by the value loss the market shows, typically through paired sales or capitalized rent loss. Three bedrooms sharing one bath is a textbook deficiency, and the stem hands you the decisive fact by stating the addition is economically justified.
Background Knowledge
You need the economic test for curability - cost to cure compared against value added - and the measurement conventions that follow: curable items measured at cost to cure, incurable items measured by market-derived value loss. You should also know the difference between functional deficiency and superadequacy, the concept of excess cost where a retrofit is more expensive than original installation, and how curable items interact with the highest and best use of the property as improved.
Real-World Application
An appraiser finds a three-bedroom home with one bath in a subdivision where two-bath homes sell for twenty-two thousand more, and a contractor's bid to add a bath in existing space is sixteen thousand. Because the cure returns more than it costs, the item is curable and enters the breakdown at cost to cure.
More Cost Approach Questions
In a cost approach for a proposed building, the appropriate cost basis is generally:
A warehouse cost $210,000 to build when the cost index stood at 105. The index is now 210. Its indicated current cost is:
The age-life method expresses depreciation as:
Market extraction of depreciation is limited by the fact that it:
Functional obsolescence caused by a deficiency is measured as curable when:
Curable physical deterioration is measured at cost to cure because:
A 2,050 sq ft dwelling is priced at $178 per square foot with a $34,000 detached garage and $21,500 of site improvements. Cost new is:
Direct costs in a construction budget include:
An appraiser writes that a 40-year-old house has an effective age of 10 but describes original wiring, original kitchen and a 25-year-old roof. The report's problem is:
A 45-year-old office building has undergone extensive system upgrades (HVAC, electrical, fire suppression) and interior modernization, resulting in strong tenant demand and rental rates exceeding those of newer buildings in the area. The appraiser estimates its total economic life at 65 years. Which statement best reflects the likely relationship among its chronological age, effective age, and remaining economic life?
People Also Study
Real Estate Market
13.6% of exam
Property Description
11.8% of exam
Land or Site Valuation
4.5% of exam
Sales Comparison Approach
16.4% of exam
Income Approach
8.2% of exam
Previous Question
The roof needs replacement at a cost of $8,400 and the exterior needs painting at a cost of $2,600. Both are economically feasible to correct. What is the curable physical deterioration?
Next Question
Using extraction, three sales of 20-year-old homes show about 20% total depreciation. The implied straight-line annual rate is: