When an appraiser uses replacement cost instead of reproduction cost, which form of depreciation is automatically eliminated from the analysis?

When an appraiser uses replacement cost

Multiple choice — select the best answer

APhysical deterioration — curable
BExternal obsolescence
CEconomic obsolescence caused by market conditions
DFunctional obsolescence attributable to the use of outmoded or superadequate materials in the original construction

✓ Correct answer: D. Functional obsolescence attributable to the use of outmoded or superadequate materials in the original construction Replacement cost is based on a modern equivalent building, so any obsolescence caused by using outdated or superadequate original materials is already excluded from the cost estimate — it does not need to be separately deducted as functional obsolescence.

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Topic: Cost Approach

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