You are appraising a 10 year old, ranch style, 2,100 square foot residence, with 6 rooms, 3

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Question:

You are appraising a 10 year old, ranch style, 2,100 square foot residence, with 6 rooms, 3 bedrooms, and 1 bath.

Reproduction cost new is reliability estimated from a cost service at $100 per square foot.

The market value of the site is estimated at $34,000 based on a direct sales comparison approach for vacant lots. The hot water heater is leaking (cost to replace is $800). Painting at a cost of $1000 is immediately necessary.

The carpet is 2 years old (with a life of 10 years) and a cost new is $6,000.

The roof is 10 years old (with a life of 20 years) and a cost new is $11,000.

The appliances are 10 years old (with a life of 15 years) and cost new is $2,500.

This home has a one car garage, while other homes in the neighborhood have 2 car garages. Cost to convert to a two car garage is $10,000 now, but if done when the home was constructed would have cost $7,000 (in today’s costs).

The traffic noise from the location near a main traffic artery seems to result in a loss of value of $9,000.

Most homes in the neighborhood have two baths. Cost new to add a bathroom now is $25,000 whereas had it been added when built it would have cost $20,000.

After the physical deterioration is cured the effective age will be eight years, with a normal economic life new of 60 years.

Estimate the cost new of the residence, after deducting for physical, functional, and economic depreciation. Remember that land is 20% of total value and is taken from the market or direct sales approach and thus already includes functional and economic obsolescence.