Property Valuation
Vermont's 'reproduction cost' versus 'replacement cost' in appraisal:
AAre identical for all purposes
BReproduction cost replicates the exact structure; replacement cost builds a functional equivalent using current materials✓ Correct
CReplacement cost is always higher
DOnly applies to historic buildings
Explanation
Reproduction cost is the cost to build an exact duplicate of the subject building using original materials and methods. Replacement cost is the cost to build a functionally equivalent building using current materials and methods.
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Key Terms to Know
Appraisal
A professional estimate of a property's market value prepared by a licensed or certified appraiser.
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.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
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