Appraisal - Cost Approach Flashcards Preview

Appraisal > Appraisal - Cost Approach > Flashcards

Flashcards in Appraisal - Cost Approach Deck (31):
1

Termite damage

Physical deterioration

2

Depreciation: Age-Life Method

Effective Age/Total Economic Life

3

Quantitative Survey Method

estimate the cost of improvement; present the most time and greatest detail

4

Depreciation: Breakdown Method

一樣樣計
Physical deterioration + functional obsolescence + external obsolescence + cost to cure physical damage

5

Incurable Cost

Subtract the curable items from the Cost New

6

Depreciation

Curable + Incurable

7

Reproduction Cost

Exact replica including deficiency and super adequacy (any functional obsolesce depreciation must considered)

8

Replacement Cost

Functional Equivalent
Do not include depreciation and "as is" value of site improvement, just add up the cost!

9

Entrepreneurial Profi

The reward associates with the risk involved in a real estate project

10

Unit in Place

The method widely used by contractors that entails the cost addition of all major building component

11

Accrued depreciation

the difference between an improvement's cost new and its contribution to market value as of the date of appraisal;
-Market Extraction - Age/Life - Breakdown

12

Value

Site Value + Reproduction Cost New Improvement
or
Estimated site value + Depreciated cost new

13

Straight-line depreciation

i.e. economic life = 80 years = 100%/80 = 1/80= 0.0125= 1.25% depreciation per year

14

Curable Item

The cost to cure is equal to or less than the contributory value. As long as the increase in contributory value is greater than the costs to replace, repair, or correct the problem, the problem is deemed curable

15

External Obsolescence

It is most often incurable
Deals with a loss in the building's value

16

Replacement Cost

Methods
Comparative-Unit
Quantity Survey
Unit-In-Place

17

Cost Approach

Is most applicable for..
-special use properties
-when improvement are relatively new
-limited amount of accrued depreciation

18

Depreciation

Loss in value of the "as is" condition of the subject structure when compared to a new one

19

Determine Weight of Cost Approach

Scope of Work

20

Depreciation - Market Extraction

Most preferred

21

Depreciation - Physical Obsolescence
Modified Age/Life

Curable + Incurable vs. effective age
1. Calculate Cost New
2. Curable Cost (stated)
3. Incurable Cost = (Cost New - Curable Cost ) x incurable depreciation rate (effective age/total economic life)
4. Total Depreciation = Curable + Incurable Depreciation
5. Total Deprecation % = Total Depreciation/Cost New

22

Cost Multiplier

multiply by replacement cost only, do not multiply by land cost

23

Direct Cost

Relate directly to the property itself in regards to CONSTRUCTION

24

Index Factor

Cost of building = Original cost x Index Factor

25

Fiscal Policy

The management of government receipts and expenditures
政府財政收入

26

Monetary Policy

Federal Reserve, interest rate
貨幣供應控制

27

Depreciation of Land

Land never depreciated! 0.00

28

Depreciation %

curable depreciation + incurable depreciation (derived from cost new - curable x )

29

Sf/$ scale

smaller in a larger place

30

Cost New

Improvement
Do not include depreciation

31

Curable Functional Depreciation

Cost to remove superadequect item - salvage cost + cost to insall