An appraiser in California is using the cost approach to value a newly constructed home in a master-planned community in the Inland Empire. Under California appraisal practice, which type of cost estimate is MOST commonly used for a recently built residential property?
Correct Answer
D) Replacement cost, which estimates the cost to build a structure with similar utility using current materials and building standards
Under USPAP and California appraisal practice, replacement cost is the most commonly used cost estimate for residential properties. It estimates the cost to construct a building with equivalent utility using current construction standards, materials, and design. For a newly built home, replacement cost closely approximates the actual construction cost and is the preferred method.
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Previous Question
A California appraiser is valuing a condominium in downtown San Diego. Under Proposition 19 (effective February 2021), certain intergenerational transfers may receive partial reassessment exclusions. The appraiser identifies a comparable condo that was a parent-to-child transfer where the child received a Prop 19 exclusion. The child subsequently sold the condo six months later at market value. Should the appraiser use this subsequent sale as a comparable?
Next Question
An appraiser is estimating the cost new of improvements for a single-family home using the cost approach. The living area is 1,800 sq ft at $285 per sq ft. The attached garage is 600 sq ft at $95 per sq ft. Site improvements (driveway, landscaping, and pool) are estimated at $65,000. What is the total cost new of improvements before depreciation?