SRA Cost Approach & Depreciation Analysis 2

Question 1

The quantity survey method of cost estimation is considered which of the following?

Accepted Answer

The most comprehensive and most time-consuming cost estimating method

Answer

The least accurate but fastest method for residential appraisals

Answer

Only applicable to commercial and industrial properties

Answer

A simplified version of the unit-in-place method

Question 2

A 'superadequacy' in the context of functional obsolescence refers to:

Accepted Answer

A feature that exceeds what the current market demands, resulting in a cost that cannot be fully recouped in value

Answer

A feature that is absent from the property but required by current market standards

Answer

An improvement that exceeds local building code requirements

Answer

A property that is priced above the average for its market area

Question 3

In the cost approach, how is land value treated?

Accepted Answer

It is estimated separately and then added to the depreciated cost of improvements

Answer

It is folded into the total building cost estimate

Answer

It is estimated using income capitalization techniques

Answer

It is considered irrelevant to the cost approach conclusion

Question 4

Which best describes 'incurable' physical deterioration?

Accepted Answer

Physical deficiencies where the cost to remedy exceeds the value the cure would add to the property

Answer

Deferred maintenance items that a prudent buyer would correct upon purchase

Answer

Normal wear and tear visible on interior finishes and surfaces

Answer

Damage caused specifically by a natural disaster event

Question 5

The unit-in-place method estimates building costs by:

Accepted Answer

Pricing each major building component separately to include both material and installation costs

Answer

Applying a single published cost per square foot to the total building area

Answer

Conducting a full itemized quantity survey of all construction materials

Answer

Comparing the subject's building cost to recent comparable property sales

Question 6

When using the market extraction (sales extraction) method to estimate depreciation, an appraiser:

Accepted Answer

Derives depreciation from analysis of actual comparable market sales

Answer

Uses standardized depreciation tables published in cost manuals

Answer

Calculates depreciation by dividing effective age by total economic life

Answer

Applies a fixed annual percentage to the building's original construction cost

Question 7

What is 'remaining economic life' as used in the cost approach?

Accepted Answer

The estimated period during which the improvements will continue to contribute positively to overall property value

Answer

The actual chronological age subtracted from an assumed 100-year total lifespan

Answer

The number of years until the property requires a complete structural renovation

Answer

The remaining term on the property's existing mortgage financing