SAEE SAEE - Cost Approach and Depreciation Questions and Answers 4

Question 1

When using the modified age-life method, an appraiser separates which items from the base calculation?

Accepted Answer

Curable items of deferred maintenance and functional obsolescence

Answer

The modified age-life method removes curable items first, calculates the age-life ratio on the remaining cost, then adds back the curable depreciation.

Question 2

A factory closes near a residential neighborhood, causing nearby home values to fall 10%. This value loss is an example of:

Accepted Answer

External obsolescence

Answer

A factory closure affecting nearby property values is an external (economic) influence outside the owner's control.

Question 3

Entrepreneurial profit in the cost approach represents:

Accepted Answer

The developer's expected return for risk and expertise in creating the property

Answer

Entrepreneurial profit is the market-derived reward a developer expects for taking on the risk and effort of a development project.

Question 4

Which method of estimating depreciation is considered most reliable because it is based on market evidence?

Accepted Answer

Market extraction method

Answer

The market extraction method derives depreciation directly from comparable sales, making it the most market-supported approach.

Question 5

A superadequacy in a building refers to:

Accepted Answer

A feature that exceeds what the market demands and adds less value than it costs

Answer

A superadequacy is an over-improvement — a feature costing more to include than the value it contributes to the property.

SAEE Test Practice Test

SAEE Test Practice Test

SAEE SAEE - Cost Approach and Depreciation Questions and Answers 4