What does supported remaining economic life describe in collateral analysis?
Correct Answer
D) How long the improvements will keep contributing to value
Remaining economic life is the estimated period during which the improvements will continue to contribute to value, so it informs the supported horizon of future improvement contribution. It does not itself set tax assessments, down payments or interest rates.
Why This Is the Correct Answer
Remaining economic life is the estimated period during which the improvements will continue to contribute to value, so it informs the supported horizon of future improvement contribution. It does not itself set tax assessments, down payments or interest rates.
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?
A new feature in the improvements has a current cost of $45,000 and a market contribution of $18,000. The entire difference is due to superadequacy, with no physical or external loss and no overlap. What is the loss from the superadequacy?
An external influence causes an annual net income loss of $9,600. The capitalization rate for the loss is 8%, and no other economic factors change. What is the indicated loss in value of the whole property, before allocation between site and improvements?
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Previous Question
An appraiser is extracting depreciation from a comparable dwelling that was listed at $410,000 and sold for $395,000 in a cash transaction. The price included $15,000 of furniture conveyed with the house. At the sale date, site value was $105,000 and improvement cost new was $340,000. What are the improvement contribution and the total depreciation?
Next Question
Improvement cost new $500,000 has supported 62% good factor accounting for all loss. Add supported site $240,000. What total results?