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?
Correct Answer
C) $806,000
The total cost new of improvements is calculated by summing all improvement components: living area cost ($1,800 sq ft × $285/sq ft = $513,000) + garage cost (600 sq ft × $95/sq ft = $57,000) + site improvements ($65,000) = $806,000. In the cost approach, 'cost new of improvements' excludes land value, which is added separately as a distinct step. This is consistent with the Appraisal Institute's cost approach methodology, which treats land and improvements as separate value components.
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Previous Question
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?
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A California appraiser estimates a 30-year-old home in Pasadena has a total economic life of 60 years. The replacement cost new of the improvements is $540,000. The land value is $620,000. Using the age-life method of depreciation, what is the estimated property value?