On a June 2026 appraisal, Emma estimates a home's replacement cost new at $320,000 and site value at $90,000. Physical deterioration is $20,000 and functional obsolescence is $10,000, with no external obsolescence. What indicated value does the cost approach produce?
Correct Answer
A) $380,000
Step 1: Start with replacement cost new of $320,000. Step 2: Add the depreciation amounts together: $20,000 + $10,000 = $30,000. Step 3: Depreciated improvement value is $320,000 - $30,000 = $290,000. Step 4: Add site value of $90,000 to get $380,000 indicated value.
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After a March 2026 fire, an insurer asks Appraiser David to estimate the current cost of rebuilding a historic courthouse with the same design, layout, and materials it had before the loss. Which cost concept best fits that assignment?
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In April 2026, Maria lists a well-maintained house. Two months later, a six-lane highway opens directly behind the property and increases noise for the entire block. In the cost approach, this loss is best classified as what?