Which describes a comparative-unit cost estimate?
Correct Answer
D) A cost per square or cubic foot applied to the whole building.
Comparative-unit estimates whole-improvement cost using a compatible area or volume unit rate adjusted for relevant differences. It is distinct from pricing installed assemblies(unit-in-place), detailed quantity survey, and historical indexing. These methods are not a universal least-to-most ranking with index last.
Why This Is the Correct Answer
Option D is correct because the comparative-unit method combines all construction costs into one unit of measure, such as a price per square or cubic foot, and applies it to the whole building's size. The rate is adjusted for relevant differences from the benchmark building.
Why the Other Options Are Wrong
Option A: Pricing each installed building assembly individually.
Option A, pricing each installed building assembly individually, describes the unit-in-place method, which costs components such as walls, roof and foundation separately.
Option B: Itemizing each material quantity and each labor task.
Option B, itemizing each material quantity and each labor task, describes the quantity survey method, the most detailed approach to estimating cost.
Option C: Trending a historical construction invoice forward with a cost index.
Option C, trending a historical construction invoice forward with a cost index, describes the index or trending method, not a comparative-unit estimate.
One rate, whole building
Comparative-unit uses one rate for the whole building. Unit-in-place prices parts; quantity survey prices each piece.
How to use: Use the level of detail to match each cost method to its description.
Exam Tip
Match the level of detail: whole building, installed components, or each individual item. A historical cost adjusted by an index is its own separate method.
Common Mistakes to Avoid
- -Confusing comparative-unit with unit-in-place
- -Calling index trending a comparative-unit estimate
- -Thinking quantity survey uses a single rate for the whole building
Concept Deep Dive
Analysis
This question tests the cost estimating methods. The comparative-unit (square foot) method applies one combined unit rate to the whole building's area or volume. The other options describe unit-in-place, quantity survey and index trending.
Background Knowledge
Common cost estimating methods include comparative-unit (square foot), unit-in-place, quantity survey and index trending. The comparative-unit method applies a single rate per unit of area or volume to the whole structure. Unit-in-place prices installed components, and quantity survey prices each material and labor item.
Real-World Application
For a typical tract home, an appraiser uses a cost service's per-square-foot rate for similar quality and size, adjusted for extras. This comparative-unit estimate is faster than pricing each component or each material.
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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