Cost Approach in Real Estate Chapter Exam

Exam Instructions:

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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Question 1 1. Joe has been hired to appraise a new construction home in a new neighborhood. The 5,250 square foot home is on a 12,000 square foot lot. Joe estimated a replacement cost of the home to be $102 per square foot and the lot value of $12 per square foot. The average lifespan of a brick home is 60 years. Using the cost approach, what is the value of the home?

Question 2 2. Mike has been hired to appraise a new construction home in a new community, and he is not able to find any comparable properties. He decides to use the cost approach. Is the cost approach the best method for Mike to determine his opinion of value?

Question 3 3. The purpose of the cost approach is to determine _____.

Question 4 4. What does reconciliation to indicated value mean?

Question 5 5. Joe has been asked to determine the replacement cost of a 2,800 square foot 21-year-old brick home on an 11,000 square foot lot. Joe estimated a replacement cost of the home to be $48 per square foot and the lot value of $2 per square foot. The average lifespan of a brick home is 60 years. Using the cost approach, what is the value of the home?

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Question 6 6. External obsolescence is considered _____ because you can't pick up the house and move it to another area that does not have the problems or blight that has caused the property to lose value.

Question 7 7. The method of depreciating real property annually in equal amounts over a predetermined life span is called _____.

Question 8 8. If a four-bedroom home only has one bathroom, this feature would probably lower its value because of _____.

Question 9 9. Present tax laws allow the owners of residential property to depreciate a portion of their investment over _____ years; the owners of nonresidential investment property may depreciate a portion of their investment over _____ years.

Question 10 10. What is the total depreciation of a building from all causes?

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Question 11 11. If you purchased a home in a historic preservation district, and you needed to repair a part of the house, what method would the appraiser most likely use to determine the cost to repair or replace it?

Question 12 12. There are four methods used to calculate replacement or reproduction costs. They are:

Question 13 13. If your property is newly constructed and is not in any special taxing or historic district, your insurance policy would most likely dictate that if there is damage to your property, it will be replaced or repaired estimating the cost by the _____ method.

Question 14 14. In real estate, the replacement cost method uses _____, whereas the reproduction cost is _____ .

Question 15 15. In real estate, market value is determined by the value of the land, plus the cost of constructing a building on the property, minus _____.

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Question 16 16. Which of the following is NOT a limitation of the cost approach to property valuation?

Question 17 17. In which of these situations does the cost approach to property valuation work best?

Question 18 18. The building cost of an existing property is $85,000. A similar house could be built for $30,000 on a piece of land that could be bought for $25,000. The appraiser estimates the existing property to have $20,000 worth of depreciation. What is the valuation price using the cost approach method?

Question 19 19. The cost approach valuation of an existing house is $95,000. To purchase another lot of land nearby and build an identical house would cost $150,000. Which of the following may be true?

Question 20 20. What is the central assumption of the cost approach to property valuation?

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Question 21 21. Market extraction for cost determination involves _____.

Question 22 22. The goal of the cost approach method is _____.

Question 23 23. Actual costs are helpful and need _____.

Question 24 24. The cost approach for real estate valuation is used for _____.

Question 25 25. Using cost manuals and other services _____.

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Question 26 26. Fading paint is an example of what kind of obsolescence?

Question 27 27. The loss of a city's major employer is what type of obsolescence?

Question 28 28. In the most general sense, what does depreciation refer to?

Question 29 29. Which of the following is an example of curable obsolescence?

Question 30 30. Which of the following is the most likely example of functional obsolescence?

Cost Approach in Real Estate Chapter Exam Instructions

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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