An Alaska appraiser determines that a property has an 'as-is' value of $400,000 and a 'value subject to completion' of $450,000 for a $75,000 renovation project. This analysis suggests:
Why The renovation will add $50,000 to value — less than its cost of $75,000 Is Correct
Answer B: The renovation will add $50,000 to value — less than its cost of $75,000
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.
People Also Study
Related Alaska Questions
- In Alaska, the value added by a swimming pool to a residential property may be less than its construction cost because of the principle of:Property Valuation
- An Alaska property sold for $485,000. The appraiser determines the land is worth $95,000. The improvements' depreciated value (from the cost approach) is:Property Valuation
- An Alaska appraiser adjusts a comparable sale downward by $10,000 because the comparable has a garage and the subject does not. This adjustment suggests the market values a garage at approximately:Property Valuation
- An Alaska appraiser is estimating the value of a 20-unit apartment complex. The appraiser determines the NOI is $95,000 and selects a cap rate of 7%. The indicated value by the income approach is:Property Valuation
- An Alaska property sells for $500,000. The buyer gets a loan for $400,000. The lender requires an appraisal. The appraiser values the property at $480,000. What is the maximum loan the lender will approve at 80% LTV based on appraised value?Finance
- An Alaska homeowner wants to add a deck that costs $18,000. Studies show improvements of this type return 75% of cost at resale. How much value does the deck add?Real Estate Math
- A building in Alaska has a replacement cost of $800,000. It is 25 years old with a 50-year economic life. Using straight-line depreciation, what is the depreciated value?Real Estate Math
- An Alaska property appraiser finds the cost to replace improvements is $620,000. Physical depreciation is 15%, functional obsolescence is 5%, and external obsolescence is 3%. Total depreciation is:Real Estate Math
Key Terms to Know
A professional estimate of a property's market value prepared by a licensed or certified appraiser.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Net Operating Income (NOI)The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
Study This Topic
Practice More Alaska Real Estate Questions
1,400+ questions covering all exam topics. Start free — no signup required.
Take the Free Alaska Quiz →