Property Valuation
An economic life estimate in the cost approach refers to:
AHow long the building will physically stand before collapsing
BThe period during which a building's improvements contribute positively to property value✓ Correct
CThe statutory depreciation life set by the IRS
DThe time before the first major renovation is needed
Explanation
Economic life is the period during which improvements contribute to the property's market value. Once the economic life is exhausted, the land's value may exceed the total value including improvements.
Related Nebraska Property Valuation Questions
- A Nebraska appraiser determines functional obsolescence in an older home because it has only one bathroom for a 4-bedroom home. This is:
- The income approach to value is most often used for:
- An appraiser comparing a subject property to a comparable that sold 18 months ago would need to make a time (market conditions) adjustment because:
- Gross Rent Multiplier (GRM) is calculated as:
- The income approach to valuation capitalizes a property's net operating income using the formula:
- Appraisal reconciliation is the process of:
- When an appraiser makes adjustments in the sales comparison approach, adjustments are made to:
- The principle of substitution in appraisal theory states that:
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