Question
nnnnAll of the following would have an effect on the final estimate of value when making an appraisal of an old family residence except:
nnnnSelections
nnnn• A. Purpose of the appraisal
nnnn• B. Suitability of the residence to the site
nnnn• C. Physical condition of the building
nnnn• D. Original cost of the residence
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Answer: D
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5 Keys Summary
nnnn• The factor that would not affect the final estimate of value is the Original cost of the residence.
nnnn• The original cost of construction is considered a historical cost and generally has little or no influence on the current market value of a used home.
nnnn• The appraisal process follows the Principle of Change, focusing on the future and current market conditions rather than past costs.
nnnn• The Purpose of the appraisal is crucial because it defines the type of value being sought (e.g., market value or insurance value), directly influencing the chosen valuation methodology.
nnnn• The Physical condition and Suitability (location, functional plan, obsolescence) are critical factors because they directly impact the current desirability, depreciation, and overall usefulness of the property.
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