If a building's effective age exceeds its actual age, the appraiser is describing a building that has been:
Correct Answer
D) Neglected relative to its chronological age
Why this is correct: Effective age reflects a property's condition and utility relative to its market. If effective age exceeds actual (chronological) age, it means the property has suffered more wear, obsolescence, or neglect than typical for its years. Why the other choices are wrong: A recent purchase price does not directly determine effective age. Renovation or superior construction would typically reduce effective age, making it less than the actual age. Exam tip: Effective age > Actual age = Deferred maintenance or obsolescence. Effective age < Actual age = Recent updating or superior quality.
Why This Is the Correct Answer
Why this is correct: Effective age reflects a property's condition and utility relative to its market. If effective age exceeds actual (chronological) age, it means the property has suffered more wear, obsolescence, or neglect than typical for its years. Why the other choices are wrong: A recent purchase price does not directly determine effective age. Renovation or superior construction would typically reduce effective age, making it less than the actual age. Exam tip: Effective age > Actual age = Deferred maintenance or obsolescence. Effective age < Actual age = Recent updating or superior quality.
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:
A house has three bedrooms sharing one bathroom, and adding a second bath is economically justified. This 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:
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Previous Question
An appraiser is valuing a 1970s-era office building with a full-floor mechanical penthouse housing HVAC equipment that occupies 8% of the gross building area and consumes $42,000 annually in maintenance and energy costs—nearly triple the cost of modern, efficient rooftop units serving comparable space. The appraiser determines the penthouse is superadequate and its removal would not impair utility but would reduce operating expenses and increase net income. Which method is most appropriate for quantifying the functional obsolescence attributable to this superadequacy?
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A local mill closes and area rents fall 8%. For an income-producing subject, external obsolescence can be estimated by: