Which formula best describes the cost approach to appraisal?
Correct Answer
D) Replacement cost of improvements minus depreciation, plus land value
The cost approach estimates value by calculating what it would cost to replace or reproduce the existing improvements (buildings) at current prices, then subtracting accrued depreciation (physical deterioration, functional obsolescence, and external obsolescence), and finally adding the estimated land value. The formula is: Value = Replacement Cost of Improvements − Depreciation + Land Value. This approach is especially useful for new construction, special-use properties, and properties with few comparable sales.
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- → The income approach to appraisal is most commonly used for which type of property?
- → External obsolescence in Oklahoma:
- → Which of the following correctly lists the three types of depreciation recognized in real estate appraisal?
- → The sales comparison approach to appraisal is most appropriate for which type of property?
- → Which formula correctly calculates the capitalization rate?
- → The sales comparison approach to appraisal is most commonly used for which type of property?
- → Which four tests must a use satisfy to qualify as the highest and best use of a property?
- → Three depreciation:
- → Cap rate:
- → A Comparative Market Analysis (CMA) is best described as which of the following?
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