Property Valuation
In the cost approach to value, 'reproduction cost' differs from 'replacement cost' in that reproduction cost is the:
ACost to build a functionally equivalent building using modern materials
BCost to build an exact replica of the existing structure using the same materials and methods✓ Correct
CCost to demolish and rebuild the structure
DInsured value of the building
Explanation
Reproduction cost is the estimated cost to construct an exact replica of the subject building using the same or closely similar materials and methods as of the effective date of the appraisal. Replacement cost uses modern materials and methods for a functionally equivalent building.
People Also Study
Related New York Questions
- An investor purchased a NYC building for $2,000,000. After 5 years the NOI was $140,000. Using the income approach, if the market cap rate is 6.5%, the current value is approximately:Real Estate Math
- In a New York appraisal using the cost approach, 'depreciation' refers to:Property Valuation
- In New York, when estimating value using the cost approach, the formula is:Property Valuation
- A building in New York has 12 apartments, each renting for $2,000/month. The gross rent multiplier (GRM) for similar buildings is 14. What is the estimated value?Real Estate Math
- The cost approach to value is most reliable for:Property Valuation
- When using the sales comparison approach, an appraiser makes adjustments to comparables. If a comparable has a feature the subject property lacks, the appraiser will:Property Valuation
- A property generates monthly rent of $5,000. If the GRM is 10, what is the estimated value of the property using annual gross rent?Real Estate Math
- A property generates NOI of $72,000. The building value is $800,000, land is $100,000. Using the building residual technique, if the land capitalization rate is 6% and building rate is 8%, what is the building income attributed to the building?Real Estate Math
Key Terms to Know
Appraisal
A professional estimate of a property's market value prepared by a licensed or certified appraiser.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
DepreciationA reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
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 New York Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free New York Quiz →