Exam 7: Valuation Using the Sales Comparison and Cost Approaches

Assume you have been hired to appraise a local hospital.Your best estimate of the reproduction (or replacement)cost of the building is $3,700,000.However,upon evaluating the use of land in the local area,you have deemed the value of the site to be worth an additional $800,000.If the building has depreciated by $500,000 over its lifetime and there are no further depreciation losses due to external or functional obsolescence,what is the indicated value of the hospital using the cost approach?

In using transaction data to determine the current value of the subject property,it is important to recognize that general market conditions may have changed since a particular transaction occurred.Property A sold 18 months ago for $235,000 and Property B sold 12 months ago for $215,000.If the two properties are priced today at $239,500 and $222,300,respectively,what is the average monthly rate of increase that can be used to adjust comparable prices for changes in market conditions?

Given the following information,determine the value of having an additional bathroom.Assume that the comparable properties are similar in all other attributes besides those listed in the table below.

Accrued depreciation is the difference between the current market value of a building and the total cost to reproduce it new.One reason for this difference is related to changes in tastes,preferences,technical innovations,or market standards.This is commonly referred to as:

The cost approach to valuation assumes the market value of a new building is similar to the cost of constructing it today.Which of the following terms refers to the expenditure required to construct a building of equal utility using modern construction techniques,materials,and design that eliminates outdated aspects of the structure?

Let's assume that we are about to appraise a house using the cost approach.The home was originally constructed in the early 1900s and is one of the last of its kind in this area.The cost of constructing an exact replica of this residence is estimated to be $350,000.On our trip to the actual property,we notice that this is the only residential unit located on this particular road.Based on the current usage of adjacent real estate,we estimate that the property would be worth an additional $25,000 in its highest and best use.However,due to the dramatic shift in the perceived safety of the neighborhood,values of any remaining residential properties in the area have fallen by $20,000.Due to the home's age,we also notice that there has been a significant amount of physical deterioration to the building,amounting to an estimate of $50,000 in lost value.Since the home was built over 100 years ago,the floor plan is quite obsolete relative to current preferences.This has a detrimental effect on the value of the property that is estimated to be approximately $15,000.Given this information,determine the appraised value of the home using the cost approach.

While there is no specific number of comparables that is required for every appraisal assignment,how many comparable sales are considered adequate as long as the properties are very similar to the subject property?

Suppose that an appraiser has just completed her analysis using the cost approach to valuation.She has determined that the market value of the subject property is $400,000.If the Added value of the site was $80,000 and accrued depreciation amounted to $50,000,what was the reproduction cost of the building?

In real estate markets,a transaction occurs only when the investment value of the buyer exceeds the investment value of the seller.The buyer's investment value is the ________ that he or she would be willing to pay for a particular property,while the seller's investment value is the _______ that he or she would be willing to accept.

Most appraisers would say that report writing is one of the most important functions that they perform.Assume that an appraiser is putting together a report for a single family home.Which of the following reporting options would be the most commonly used in this scenario?