During Dana's August 2026 inspection, she notes a worn roof, an awkward kitchen layout, and a noisy electrical substation across the street. Under the cost approach, how should these items be analyzed?
Correct Answer
D) As physical deterioration, functional obsolescence, and external obsolescence, respectively
A worn roof is a condition problem with the physical structure, so it is physical deterioration. An awkward kitchen layout is a utility or design problem, so it is functional obsolescence. A noisy electrical substation is an outside influence, so it is external obsolescence.
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Previous Question
On a November 2026 assignment, a home's replacement cost new is $350,000 and site value is $90,000. The appraiser estimates physical deterioration at 10% of the improvements and functional obsolescence at $15,000, with no external obsolescence. What indicated value does the cost approach produce?
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For a 2026 mortgage appraisal on a typical modern residence, Appraiser Noah chooses replacement cost instead of reproduction cost. What is the best reason for that choice?