RAA RAA Cost Approach & Depreciation 1

Question 1

In the cost approach, what does 'reproduction cost' mean?

Accepted Answer

Cost to build an exact replica using the same materials and methods as the original

Answer

Reproduction cost is the cost to build an exact duplicate of the subject using original materials, standards, and design.

Question 2

Which cost approach method estimates improvement value by applying a cost per square foot to the gross living area?

Accepted Answer

Comparative Unit Method (Square Foot Method)

Answer

The Comparative Unit (Square Foot) Method multiplies cost per square foot by the building area, making it the most common method in residential appraisal.

Question 3

Physical deterioration in the cost approach is best described as:

Accepted Answer

Loss in value caused by wear, tear, and aging of the physical structure

Answer

Physical deterioration is the loss in value from actual wear and tear, deferred maintenance, and age of the improvements.

Question 4

Functional obsolescence resulting from a deficiency (something the subject lacks compared to current market standards) is called:

Accepted Answer

Incurable functional obsolescence — deficiency

Answer

A functional deficiency is incurable functional obsolescence when the cost to cure exceeds the added value, such as a missing second bathroom in a market that demands two.

Question 5

What is 'superadequacy' in the context of the cost approach?

Accepted Answer

An excess feature whose cost exceeds its contribution to market value

Answer

Superadequacy (over-improvement) is a form of functional obsolescence where an excess feature costs more than its market value contribution.

(RAA) Certified Residential Accredited Appraiser Practice Test

(RAA) Certified Residential Accredited Appraiser Practice Test

RAA RAA Cost Approach & Depreciation 1