Property Valuation
A West Virginia appraiser is asked to estimate the value of a historic Charleston building. The cost approach may be less reliable because:
AHistoric buildings have no depreciation
BAccurately estimating depreciation on older historic structures is difficult and the cost approach tends to understate value✓ Correct
CHistoric designation eliminates the building from normal market forces
DLenders don't accept the cost approach for historic properties
Explanation
For older or historic properties, the cost approach can be unreliable because accurately measuring all forms of depreciation (physical, functional, external) is challenging. Buyers may pay premiums for historic character that the cost approach cannot capture.
Related West Virginia Property Valuation Questions
- In West Virginia, a property value that is 'bracketed' in the sales comparison approach means:
- The principle of conformity holds that property value is maximized when:
- Which West Virginia market condition would cause an appraiser to make a positive adjustment to a comparable sale?
- Which West Virginia property characteristic typically requires the greatest downward adjustment in the sales comparison approach?
- A West Virginia property generates $36,000 in annual net operating income (NOI). If the market cap rate is 8%, what is the property's estimated value?
- Market value in a real estate appraisal is defined as the most probable price a property will sell for:
- Which type of depreciation in real estate appraisal is caused by factors external to the property, such as a new industrial facility nearby?
- A West Virginia appraiser who is pressured by a loan officer to hit a specific value that would qualify the borrower for a larger loan should:
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