In an appraisal using the cost approach, the term 'reproduction cost' means:
Why The cost to build an exact replica of the existing structure using the same materials Is Correct
Answer B: The cost to build an exact replica of the existing structure using the same materials
Exam Tip: Property Valuation
Valuation questions focus on the three approaches to value: sales comparison, cost, and income. Know which approach is best for which property type. The income approach uses cap rate and NOI — memorize these formulas.
Key Property Valuation Terms in This Question
People Also Study
Related Alabama Questions
- In the cost approach, the term 'reproduction cost' means:Property Valuation
- The cost approach to appraisal is MOST reliable when:Property Valuation
- Which appraisal approach involves estimating the value of a property by calculating the cost to reproduce or replace the improvements plus the land value?Property Valuation
- The term 'depreciation' in appraisal means:Property Valuation
- A building has a replacement cost new of $500,000. It has a remaining economic life of 30 years and a total economic life of 50 years. What is the accrued depreciation using straight-line method?Real Estate Math
- An appraiser estimates a property at $425,000 using the sales comparison approach and $410,000 using the cost approach. The final reconciled value is $420,000. The sales comparison approach received the most weight. This is appropriate because:Real Estate Math
Key Terms to Know
A professional estimate of a property's market value prepared by a licensed or certified appraiser.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Study This Topic
Practice More Alabama Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Alabama Quiz →