CHI Financial Analysis & Reporting 2

Question 1

When estimating repair costs in a home inspection report, which approach most accurately reflects true replacement value?

Accepted Answer

Current market cost of materials plus labor

Answer

Replacement value is best estimated using current market prices for materials combined with prevailing local labor rates.

Question 2

A home inspector notes deferred maintenance totaling $18,500. How should this figure be presented in the inspection report?

Accepted Answer

As an itemized cost estimate for each identified deficiency

Answer

Best practice is to itemize each deficiency with its associated estimated cost so buyers can evaluate individual repair priorities.

Question 3

Which financial metric is most useful for a buyer evaluating whether to request seller concessions based on inspection findings?

Accepted Answer

Estimated cost-to-cure for identified defects

Answer

The cost-to-cure figure represents the estimated expense to correct inspection deficiencies and directly informs concession negotiations.

Question 4

Functional obsolescence in a home inspection context refers to:

Accepted Answer

A loss in value due to outdated design or features that no longer meet current standards

Answer

Functional obsolescence is a loss in value resulting from features that are outmoded or no longer desirable, such as an outdated floor plan or insufficient electrical capacity.

Question 5

When a roof has 5 years of remaining useful life out of a 25-year lifespan, what percentage of its economic life has been consumed?

Accepted Answer

80%

Answer

With 20 of 25 years elapsed (25 − 5 = 20), the roof has consumed 80% of its economic life.

(CHI) Certified Home Inspector Practice Test

(CHI) Certified Home Inspector Practice Test

CHI Financial Analysis & Reporting 2