What distinguishes economic curability of a physical defect?
Correct Answer
A) Whether the full supported benefit of correction justifies its full cost.
A physically feasible repair is economically curable when the supported benefit justifies its full cost. If cost exceeds benefit under the stated alternatives, it is economically incurable. Neither paired sales nor age-life is universally the only method for a category.
Why This Is the Correct Answer
Option A is correct because the relationship between the cost involved and the economic benefit derived determines whether it is economically feasible to correct physical deterioration. When the full supported benefit justifies the full cost, the defect is economically curable; when cost exceeds benefit, it is incurable.
Why the Other Options Are Wrong
Option B: Whether a contractor can physically perform the work at any cost.
Option B is wrong because it asks whether a contractor can physically perform the work at any cost. Physical feasibility alone does not make a repair economically curable; the benefit must justify the cost.
Option C: Whether the defect affects a commercial rather than residential property.
Option C is wrong because whether the defect affects a commercial or residential property does not decide curability. The test is the comparison of cost and benefit for the specific defect.
Option D: Whether an arbitrary whole-building depreciation ratio is under 25%.
Option D is wrong because an arbitrary whole-building depreciation ratio under 25% has no bearing on whether a particular defect is worth curing. Curability depends on that item's cost compared with its value benefit.
Can fix versus worth fixing
Curability is about whether a fix is worth it, not whether it can be done. Compare cost to cure with value gained.
How to use: Use this distinction when an answer choice confuses physical possibility with economic curability.
Exam Tip
Look for the option that compares cost with benefit; options based on property type or fixed ratios do not test curability.
Common Mistakes to Avoid
- -Treating any physically repairable item as curable
- -Basing curability on property type
- -Using an overall depreciation percentage to judge curability
Concept Deep Dive
Analysis
This question tests the economic, not physical, test for curability. Almost any defect can be physically fixed if cost is ignored, so the question is whether the repair makes economic sense. A defect is economically curable when the supported benefit of correcting it justifies its full cost.
Background Knowledge
An item of physical deterioration is considered curable when the cost to correct it does not exceed the resulting economic benefit. If the cost to cure exceeds the benefit, the item is incurable even though it could be physically repaired. The same cost-benefit logic applies to functional obsolescence.
Real-World Application
An appraiser finds a cracked foundation that a contractor can repair for a large sum. Market evidence shows the repair would add far less than its cost, so the appraiser treats the item as incurable physical deterioration.
More Cost Approach Questions
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Which scenario most strongly supports giving the cost approach substantial weight?
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Total PHYSICAL depreciation is $62,000, consisting only of curable physical $9,000, short-lived incurable $14,000, and a remaining long-lived incurable component. Functional and external loss are excluded. What is the remaining component?