Property Valuation
In the cost approach to value in Montana, 'reproduction cost' differs from 'replacement cost' in that:
AReproduction cost is always higher than replacement cost
BReproduction cost is the cost to build an exact replica; replacement cost is the cost to build one with similar utility using current materials and methods✓ Correct
CReplacement cost uses current prices while reproduction cost uses historic prices
DThey are interchangeable terms with no difference
Explanation
Reproduction cost is the cost to build an exact duplicate using the same materials and methods. Replacement cost is the cost to build a structure with the same utility using current materials and construction methods.
People Also Study
Related Montana Questions
- An appraiser using the cost approach for a Bozeman single-family home calculates that the improvements have 20% physical depreciation. If the structure's reproduction cost is $250,000, what is the depreciated value of the improvements?Property Valuation
- In Montana, the replacement cost (as distinguished from reproduction cost) in the cost approach uses:Property Valuation
- A Montana home has a land value of $60,000 and improvements estimated at $180,000 using the cost approach. If the land represents what percentage of total value?Property Valuation
- The income approach to value is most commonly used for:Property Valuation
- A Montana property has an NOI of $42,000 per year and a cap rate of 7%. What is the estimated market value using the income approach?Real Estate Math
- A property has an annual NOI of $36,000 and a cap rate of 8%. What is its estimated value using the income approach?Real Estate Math
- The Public Land Survey System (PLSS) used in Montana divides land using:Property Ownership
- In Montana, a 'construction loan' differs from a permanent mortgage in that:Finance
Key Terms to Know
Appraisal
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.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Study This Topic
Practice More Montana Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Montana Quiz →