In the breakdown method, how is remaining incurable physical deterioration estimated after curable items have been treated separately?
Correct Answer
D) Age-life ratios applied to the remaining cost
In the breakdown method, apply supported component age-life ratios to their defined remaining cost bases after separately treated curable items. This does not mean using the full component replacement cost as its loss or a flat unsupported service percentage. Trace exclusions to prevent overlap.
Why This Is the Correct Answer
In the breakdown method, apply supported component age-life ratios to their defined remaining cost bases after separately treated curable items. This does not mean using the full component replacement cost as its loss or a flat unsupported service percentage. Trace exclusions to prevent overlap.
More Cost Approach Questions
Why can equivalent-utility replacement cost be useful for an obsolete improvement?
An appraiser estimates the current replacement cost new of the improvements at $890,000, accrued depreciation from all causes at $170,000, and land value at $325,000. All necessary cost components and depreciation are included in those amounts. What is the indicated property value?
Improvement cost new is $595,000. Separately supported improvement depreciation deductions of $48,000, $27,000 are expressly nonoverlapping and not already excluded from cost new. Add supported site value of $155,000, already reflecting any site losses. What total indicated value results?
What best supports a claimed loss from a bathroom-layout deficiency?
Improvement cost new is $1,850,000. Separately supported improvement depreciation deductions of $310,000, $620,000 are expressly nonoverlapping and not already excluded from cost new. No site is included. What depreciated improvement amount results?
Which scenario most strongly supports giving the cost approach substantial weight?
A cost total $650,000 explicitly includes $40,000 of non-realty FF&E outside the appraised real-property interest. Exclude it. Supported realty-only total depreciation is $55,000. Add site $200,000, with no overlap. What real-property cost indication results?
A 2,200-sf dwelling costs $200 per square foot, and a separate 400-sf garage costs $75 per square foot. These costs are complete and do not overlap. Both have an effective age of 15 years and a total life of 50 years, with straight-line depreciation and no salvage value. No site value or other loss is involved. What is the combined depreciated cost of the dwelling and garage?
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Previous Question
Cost new of the improvements consists of hard costs of $360,000, soft costs of $40,000, and entrepreneurial incentive of $40,000, with no overlap among them. Total depreciation is estimated at 25% of this full cost, and the site is valued at $160,000. What value does the cost approach indicate?
Next Question
The improvements have a cost new of $540,000 and total depreciation from other causes of $75,000. In addition, an external influence causes an annual net income loss of $3,200, which is allocated entirely to the improvements and is not already counted in the other depreciation. The appropriate capitalization rate for this loss is 8%. The site value, which already reflects any site influence, is $105,000. What value does the cost approach indicate?