The unit-in-place method estimates cost by:
Correct Answer
A) Pricing installed components — walls, roof, floors — as whole units
Unit-in-place prices installed building assemblies or components. Comparative-unit uses a whole-building area or volume rate, quantity survey itemizes detailed quantities and labor, and indexing trends compatible historical costs. Unit-in-place is not a synonym for comparative-unit.
Why This Is the Correct Answer
Option A is correct because the unit-in-place method adds together the installed cost of each component, such as foundations, walls, roof and floors, priced as whole units. Costs for components like walls and foundations are often stated per linear foot or other unit, then multiplied by the quantity in the building.
Why the Other Options Are Wrong
Option B: Multiplying total floor area by one rate
Option B, multiplying total floor area by one rate, describes the comparative-unit method. Unit-in-place prices separate building components instead of applying a single whole-building rate.
Option C: Trending the original construction contract
Option C, trending the original construction contract, describes the trended historical cost or index method. Unit-in-place builds current cost from installed components rather than adjusting an old contract.
Option D: Counting each nail, fixture and labor hour as a separate cost item
Option D, counting each nail, fixture and labor hour as a separate cost item, describes the quantity survey method. Unit-in-place groups materials and labor into installed component units rather than itemizing each piece.
Parts in place
Unit-in-place prices the parts already in place: wall, roof, floor. Comparative-unit prices the whole box; quantity survey prices each nail.
How to use: Use the box, parts and nails ladder to sort the three main cost methods by detail.
Exam Tip
Look for the level of detail in each choice: one overall rate, installed components, or each item and labor hour. Each level points to a different method.
Common Mistakes to Avoid
- -Confusing unit-in-place with the comparative-unit method
- -Confusing unit-in-place with the quantity survey method
- -Thinking unit-in-place trends historical costs
Concept Deep Dive
Analysis
This question tests the differences among the main cost-estimating methods. Unit-in-place prices installed building components, comparative-unit uses one overall rate per area or volume, quantity survey itemizes materials and labor in detail, and indexing trends historical costs. Match the description to the method named in the stem.
Background Knowledge
Appraisers estimate cost new using comparative-unit, unit-in-place, quantity survey or index methods. Unit-in-place sits between the quick comparative-unit approach and the very detailed quantity survey. It applies installed costs of common construction units to the quantities in the subject.
Real-World Application
An appraiser valuing a building with an unusual roof system and extra-thick walls finds that a single square-foot rate does not fit. She uses a unit-in-place approach, pricing the walls per linear foot, the roof per square and the floors per square foot, then totals the components.
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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