ASA Real Property Appraisal Concepts 2 — Questions and Answers
Question 1: In the cost approach, 'reproduction cost' differs from 'replacement cost' in that reproduction cost is the cost to build:
- An exact replica using the same materials and methods (Correct answer)
- A functionally equivalent building with modern materials
- The building at today's square-foot cost only
- The land and improvements combined
Correct answer: An exact replica using the same materials and methods
Reproduction cost replicates the subject exactly; replacement cost constructs a building of equal utility using current materials, design, and standards.
Question 2: Which land valuation technique extracts land value by subtracting the depreciated value of improvements from total property value?
- Extraction method (Correct answer)
- Allocation method
- Ground rent capitalization
- Subdivision development analysis
Correct answer: Extraction method
The extraction (abstraction) method derives land value by deducting the depreciated cost of improvements from the known sale price of a comparable property.
Question 3: A property earns above-market contract rent under an existing lease. The premium over market rent is called:
- Leased fee advantage or bonus value (Correct answer)
- Sandwich leasehold interest
- Leasehold equity
- Excess depreciation
Correct answer: Leased fee advantage or bonus value
When contract rent exceeds market rent, the lessor (fee owner) benefits from a bonus value equal to the present value of that rent differential.
Question 4: Functional obsolescence in real property appraisal is caused by:
- Deficiencies or superadequacies in the design or layout of the improvements (Correct answer)
- Physical wear and tear over time
- Adverse changes in the surrounding market area
- Contamination or environmental hazards
Correct answer: Deficiencies or superadequacies in the design or layout of the improvements
Functional obsolescence arises from within the building itself — features that were once standard but are now inadequate or excessive compared to current market expectations.
Question 5: The term 'assemblage' in real property appraisal refers to:
- Combining two or more adjacent parcels into one larger parcel of greater value (Correct answer)
- Subdividing a large tract into smaller lots
- Adding improvements to vacant land
- Estimating land value from multiple methods
Correct answer: Combining two or more adjacent parcels into one larger parcel of greater value
Assemblage is the merging of adjacent parcels, and the value increment created beyond the sum of the individual parcel values is called plottage.
Question 6: An easement appurtenant in real property:
- Benefits a neighboring parcel and transfers with the dominant tenement (Correct answer)
- Benefits only the current owner personally
- Prevents any development of the burdened parcel
- Is recorded only against the easement holder's title
Correct answer: Benefits a neighboring parcel and transfers with the dominant tenement
An appurtenant easement attaches to and travels with the dominant estate, benefiting whoever owns that parcel.
ASA Real Property Appraisal Concepts 2
In the cost approach, 'reproduction cost' differs from 'replacement cost' in that reproduction cost is the cost to build: