Cost Approach

An undamaged but functionally inadequate system causes a supported $60,000 loss. Replacement costs $85,000 and restores only $60,000, with no other benefits. What loss classification and deduction fit?

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?

The subject is a 10-year-old dwelling with improvement cost new of $640,000. A highly comparable 7-year-old dwelling recently sold for $580,000; at the sale date its site was worth $150,000 and its improvement cost new was $500,000. Market evidence shows depreciation accruing evenly with actual age. What is the depreciated value of the subject improvements?

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?

Which stated cause of supported value loss is external?

Building cost new $360,000 has 20% total building loss. Separate site improvements are already as-is $42,000 and not in the building or vacant-site figure. Vacant-site value is $150,000. What total indication results?

Building cost new is $410,000 and total building depreciation $90,000. Separate site improvements are already valued as-is at $35,000 and are not in the building figures. Add supported vacant-site value $100,000, which excludes those improvements. What total results?

The cost new of the subject dwelling is $480,000, and total depreciation of the building is estimated at 25%. Site improvements, valued separately on an as-is basis, contribute $35,000, and the land, excluding those improvements, is valued at $150,000. None of these amounts overlap. What is the indicated value by the cost approach?

Building cost new is $480,000, with total building depreciation $90,000. Separate site improvements are already as-is $40,000 and not included in the building or land figures. Supported vacant-site value is $125,000. What total indication results?

Consistent current dwelling cost new is $318,750 for 2,550 sf. What cost per square foot results?

The current cost new of the improvements is $420,000, and depreciation is estimated at 30% of that cost. Excluding land, what is the depreciated cost of the improvements?

Direct and indirect improvement costs including contractor overhead/profit total $475,000, explicitly excluding entrepreneurial incentive. Separate supported incentive is 12% of that base. What full improvement cost new results?

Direct costs including contractor overhead/profit are $420,000. Additional indirect costs are $65,000 and separately supported entrepreneurial incentive $55,000, not already counted. Land is separate and excluded from this question. What improvement cost new results?

Direct improvement costs $418,000 and indirect costs $67,000 explicitly exclude the separately supported entrepreneurial incentive $78,000. No item is included twice. What improvement cost new results?

Direct improvement costs are $430,000. Additional soft costs are 12% of direct, and separate entrepreneurial incentive is $38,400. None overlap. Supported total improvement depreciation $110,000 applies to the complete cost. Add site $200,000. What total indication results?

Direct improvement costs are $445,000, indirect costs $78,000, and additional supported entrepreneurial incentive $87,000 not already included. Land is excluded. What full improvement cost new results?

Dwelling 2,400 sf costs $128/sf and a separate 480 sf garage $46/sf. No cost item overlaps and land is excluded. What total cost new results?

Dwelling cost new is 3,000 sf×$160/sf and dwelling total loss $96,000. A separate 500 sf garage costs $60/sf with its own $6,000 total loss. No costs or losses overlap. Add site $180,000. What total indication results?

For an arithmetic illustration only, depreciate a historical $2,000,000 construction cost on a zero-salvage straight-line 40-year schedule for 10 years. What unindexed scheduled amount remains? This is not a conclusion of current market value or current replacement cost.

For an arithmetic illustration, allocate historical construction cost $2,400,000 over 40 years on a zero-salvage equal annual schedule. After 8 years, what scheduled unindexed amount remains? This is not a current market-value conclusion.

For an arithmetic schedule only, allocate historical cost $2,500,000 over 40 years with zero residual. After 8 years, what unindexed scheduled amount remains? This is not an estimate of current market value.

An appraiser reviews three items of physical deterioration at a dwelling: roofing, with a cost to cure of $9,200 and a benefit of $18,000; foundation, with a cost to cure of $45,000 and a benefit of $12,000; and paint, with a cost to cure of $3,800 and a benefit of $5,500. An item is economically curable only if its benefit exceeds its cost to cure, and there are no other costs or benefits. What is the total cost to cure of the curable items?

Before a redevelopment announcement that was not anticipated by market participants, the effective-date evidence isolates a 12% external penalty. What applies to that earlier-date appraisal?

The subject improvements have a current cost new of $650,000, an effective age of 16 years and a total economic life of 80 years. Depreciation is by the straight-line age-life method, with no salvage value or other deductions. The site value of $190,000 already reflects any site influences. What is the total indicated value, including the site?

An appraiser estimates hard costs of $420,000 and separate soft costs of $50,000, which together include all required improvement costs. Total depreciation is estimated at 30% of their sum, and the site is valued at $220,000. What total value does the cost approach indicate?

Improvement base costs total $500,000 and explicitly exclude entrepreneurial incentive. Add a supported incentive 10% of that base. Total depreciation $60,000 is expressly measured for the full resulting cost including incentive. Add site $200,000. What indication results?

Improvement cost new is $1,800,000. Separately supported improvement depreciation deductions of $200,000, $150,000, $100,000 are expressly nonoverlapping and not already excluded from cost new. No site is included. What depreciated improvement amount results?

Improvement cost new is $280,000 and a supported 72% good factor represents the entire remaining improvement proportion after all loss. Add supported site $95,000. What total results?

Improvement cost new is $352,000. Separately supported improvement depreciation deductions of $44,000, $12,000, $9,000 are expressly nonoverlapping and not already excluded from cost new. Add supported site value of $120,000, already reflecting any site losses. What total indicated value results?

Improvement cost new is $450,000. Separately supported improvement depreciation deductions of $45,000, $25,000, $15,000 are expressly nonoverlapping and not already excluded from cost new. Add supported site value of $125,000, already reflecting any site losses. What total indicated value results?

Improvement cost new is $500,000. Separately supported improvement depreciation deductions of $125,000 are expressly nonoverlapping and not already excluded from cost new. No site is included. What depreciated improvement amount results?

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?

Improvement cost new is $540,000. Separately supported improvement depreciation deductions of $38,000, $22,000 are expressly nonoverlapping and not already excluded from cost new. Add supported site value of $98,000, already reflecting any site losses. What total indicated value results?

Which two depreciation categories may each be classified as curable or incurable by comparing the cost to remedy a deficiency with the value gained?

Improvement cost new is $800,000. Separately supported improvement depreciation deductions of $120,000, $80,000, $40,000 are expressly nonoverlapping and not already excluded from cost new. No site is included. What depreciated improvement amount results?

The improvement budget has direct costs $365,000, indirect costs $48,000, and an additional supported entrepreneurial incentive $67,000 not already included in either. Land is separate. What full improvement cost new results?

The subject improvements have a cost new of $490,000, a remaining economic life of 33 years and a total economic life of 55 years. The site is valued at $171,000. Using straight-line age-life depreciation with no salvage value and no additional loss, what value does the cost approach indicate?

A sound 45-year-old dwelling stands in a district that is converting to higher-density use. The structure could physically last another 40 years, and its roof has about 10 years of useful life left. Market evidence indicates that the site will be redeveloped and the dwelling will stop contributing to property value in about 15 years. What is the remaining economic life of the dwelling?

The current cost new of the improvements is $2,400,000, with an effective age of 18 years and a total economic life of 40 years. There are no other deductions and no salvage value. What is the depreciation indicated by the straight-line age-life method alone?

An appraiser estimates that a dwelling has an effective age of 20 years and a remaining economic life of 25 years. What is its total economic life?

Which stated condition represents a market-recognized functional deficiency?

A sound building has supported market loss from insufficient ceiling clearance, but no cure analysis. What follows?