Property Valuation
The cost approach to value calculates:
ANet operating income divided by cap rate
BLand value plus depreciated cost of improvements✓ Correct
CGross rent multiplied by a market factor
DAverage price per square foot of comparable sales
Explanation
The cost approach = land value + cost to reproduce/replace improvements − accrued depreciation. Appraisers in Maryland use standardized methods to estimate property value for lending and sales.. The correct answer is Land value plus depreciated cost of improvements.
Related Maryland Property Valuation Questions
- The principle of regression in Maryland real estate means:
- Functional obsolescence in a Maryland home would BEST be described as:
- In the income approach, effective gross income (EGI) is calculated as:
- The principle of substitution states that a buyer will pay no more for a property than:
- In the sales comparison approach, an appraiser makes adjustments to comparables for differences. If a comparable has a feature the subject does NOT have, the adjustment to the comparable is:
- When a Maryland appraiser uses the cost approach for a 20-year-old residential property, they must estimate accrued depreciation. If the total depreciation is 30%, and the replacement cost new is $400,000, the depreciated value of improvements is:
- An appraiser's estimate of value for a Maryland property found under the income approach is $600,000 and under the sales comparison approach is $620,000. In reconciliation for a residential property, the appraiser would most likely:
- Which type of depreciation is caused by poor floor plan design and is generally considered incurable?
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