SAEE SAEE - Cost Approach and Depreciation Questions and Answers 5

Question 1

Physical deterioration that cannot be economically corrected is classified as:

Accepted Answer

Incurable physical deterioration

Answer

Physical deterioration is incurable when the cost to cure exceeds the contributory value the cure would add.

Question 2

An appraiser uses the breakdown method to estimate depreciation. Which categories does this method analyze?

Accepted Answer

Physical deterioration, functional obsolescence, and external obsolescence

Answer

The breakdown method categorizes all depreciation into physical deterioration, functional obsolescence, and external (economic) obsolescence.

Question 3

If a comparable sale indicates a depreciation rate of 1.5% per year for a similar structure, an appraiser using market extraction would apply this rate to the:

Accepted Answer

Reproduction or replacement cost of improvements

Answer

The extracted depreciation rate is applied to the estimated reproduction or replacement cost of the subject's improvements.

Question 4

A building's effective age is less than its chronological age. This most likely indicates:

Accepted Answer

The building has been well-maintained or renovated

Answer

Good maintenance or recent renovation makes a building appear newer than its actual age, resulting in an effective age below chronological age.

Question 5

Quantity survey method is the most detailed cost estimation method because it:

Accepted Answer

Lists and prices every material, labor hour, overhead cost, and profit separately

Answer

The quantity survey method provides the most accurate estimate by tallying every individual cost element of construction.

SAEE Test Practice Test

SAEE Test Practice Test

SAEE SAEE - Cost Approach and Depreciation Questions and Answers 5