3. list the features that are important in the design of a good floor plan,
4. understand the impact of site considerations on the value of a home,
5. list and describe the different types of foundations and framing systems used in residential construction,
6. describe the different materials used for exterior and interior finishes, and understand their relative advantages and disadvantages,
7. discuss the impact of energy-efficient design and construction on the value of a home, and

      There are many excellent resources for information about green building and energy efficient technology.
   

   The two best known resources are The Energy Star Program website (www.energystar.gov) and LEED (Leadership in Energy and Environmental Design) website (www.usgbc.org).

      set. All bedrooms are required to be accessed from a hallway
   
      7. Bathrooms
   
      Bathrooms are generally located in the sleeping zone of the house, with each
      bedroom or pair of bedrooms having its own bath. It is best if the bathrooms can be reached from the bedroom hallway without having to pass through another bedroom. A half bath, including just a toilet and sink, is often located in the living zone for the convenience of guests.
         It should be recognized that a lack of even one bathroom will significantly decrease
      marketability. If there are three bedrooms, there should be at least two bathrooms.
   
      A full bath consists of toilet, sink and shower and/or tub. In modern homes, a double sink is considered a desirable feature. The location of the toilet area should provide privacy, with a screen or partial wall.
   
      Good design requires adequate lighting and ventilation, whether natural or mechanical, and the use of materials that are easy to clean and are moisture resistant.
   
      IV. Construction <a data-bs-toggle="modal" data-bs-target="#questionModal-370424" role="button" aria-label="Open Question" class="keyword-wrapper question-trigger"><span class="keyword-container">method</span><span class="flag-trigger">❓</span></a>s and Materials
      All homes are required to comply with a number of codes, ordinances, and standards. These legal requirements cover: fire, safety, construction, environmental issues, sanitation, and occupancy.
   
      The construction methods and materials used to construct a house affect its durability,
      maintenance cost, and overall visual appeal. For an appraisal, one has to inspect the various construction components, using the proper terminology to describe them.
   
      A. Foundations
      The FOUNDATION is the engineered base on which a structure rests. It is that part
      of a building that transmits the load or weight of the building to the ground. The foundation is often called a structure’s “sub-structure.” The walls that enclose either a basement or crawl space is known as a FOUNDATION WALL and the footing upon which the building sits is known as the FOOTING.
   
      1. Types of Foundations
      a. Basement Foundation.
   
      A BASEMENT is a room of full story height located below the first floor, at least
      partially below ground level, and primarily not used for living accommodations.
   
      b. Pier and Beam Foundation.
      The PIER AND BEAM FOUNDATION, sometimes referred to as a “raised
      foundation,” consists of concrete piers on which wood or steel girders rest. The floor joists then run between the girders (see Figure 7-7).
   
      c. Concrete Slab Foundations.
      A MONOLITHIC SLAB (floating foundation) consists of a single concrete pouring
      with thickened edges. If properly engineered, these are quite strong, inexpensive and are suitable for most climates (see Figure 7-8).
   
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      Figure 7-7.   Pier and Beam Foundation
   
      Figure 7-8.  Monolithic Slab Foundation
   
      Experienced Appraiser’s Tip:  In earthquake areas or areas of expansive soils, the foundation must be engineered to conform to local requirements. Hillside residences will often have caisson foundations. Any apparent defect in a foundation should be discussed with the client and should require the client to call for a certified engineer’s investigation.
   
      A site with expansive clay soils will require special engineering, either to deal with the movement of the soil or to remove the expansive soils and replace them with properly engineered fill material.
   
      Expansive soils can be extremely damaging to foundations. Clay soils absorb water and swell in volume. In some cases they can exert thousands of pounds of pressure on the foundations. A house built on expansive soils might exhibit cracks in walls or foundation. It also may have floors that are not level, or doors and windows that stick.
   
      d. Crawl Space Foundations.
   
      A CRAWL SPACE is a shallow space located below the first floor.
   
      2. Foundation Materials
      Concrete, either poured-in-place or concrete block, is the most common foundation material. Wood, either treated or untreated, is used for certain types of residential foundation. Pressure treated wood is sometimes used for pier and beam foundations, and for foundations in areas subject to earthquakes. All wood foundations must be built in compliance with local building codes.
   
      B. Framing and Sheathing
      FRAMING is the skeleton of a building.
   
      SHEATHING is the covering that is placed over the exterior studs or rafters and serves as a base for the application of exterior siding or roofing.
   
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      1. Framing Lumber
      The term “lumber” refers to wood that has been sawn and surfaced to produce a standard size. The grades of lumber and grading rules are overseen by various trade associations, such as the National Lumber Grades Authority (NLGA) or the Western Wood Products Association (WWPA). Quality marks are included on the lumber indicating:
      * grading rules under which lumber was produced
      * grading agency under whose supervision it was produced
      * species of wood used
      * the grade
      * mill that produced the lumber
      Proper selection and use of lumber is critical. Lumber must be selected in compliance with local building codes.
      Wood shrinks as it dries. As a general rule, soft wood dries at the rate of 1% in width and 4% in thickness.
      If the lumber is allowed to dry before building starts, it can prevent problems later, such as warping or shrinking of framing materials.
   
      a. Dimensional Lumber.
   
      Lumber is manufactured to standard sizes. Some typical sizes include:
   
      Board Lumber, which is less than 2 inches thick (nominal) such as:
      1 x 2, 1 x 4, 1 x 6, 1 x 8, 1 x 10, 1 x 12
      Timbers: 5” x 5” or larger
   
      Framing Lumber, which is at least 2 inches thick (nominal)
      2 x 4 (stud)
      2 x 6 (stud)
      2 x 8 (floor joist, rafter)
      2 x 10 (floor joist, rafter)
      2 x 12 (floor joist, rafter)
   
      The dimensions noted above are “nominal” dimensions rather than true dimensions.
      The dimensions represent the rough cut size of the wood before it has been seasoned (dried) and surface planed (finished). As the wood is dried and finished, it becomes smaller (see Table 7-1).
   
      Table 7-1.  Dimensional Lumber Sizes
   
      Nominal Size  Actual Size
      2” x 4”   1 ½” x 3 ½”
      2” x 6”   1 ½” x 5 ½”
      2” x 8”   1 ½” x 7 ¼”
      2” x 10”   1 ½” x 9 ¼”
      2” x 12”   1 ½” x 11 ¼”
      b. Engineered Wood.
   
      Some wood products such as glue-laminated beams, “I-joists” and wood trusses, are engineered for specific strengths. The cost for these wood products tends to be higher than dimensional lumber, although they may be cheaper to install because they are uniform in size and easily handled.
   
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      Table 7-2.  Engineered Wood
   
      Type
   

   Description
   Use

      Glue-
   

   laminated
   (glulam)
   Several layers of wood
   are glued together.
   Often used for support beams
   because they have great strength and
   are less likely to warp.
   Laminated
   veneer
   lumber (LVL)
   Several layers of veneer
   are glued together.
   Can be used as rim boards, lintels,
   or beams.
   Oriented
   strand board
   (OSB)
   Made of pressed strands
   of wood.
   Often used for sheathing as a
   replacement for plywood.
   Laminated
   strand lumber
   (LSL)
   Similar to OSB, but the
   strands of wood are longer.
   Used for studs or rim boards.
   Parallel
   strand lumber
   (PSL)
   Similar to LSL, but the
   strands of wood are parallel,
   and the glue is applied under
   pressure.
   Used for posts and beams that require
   extra strength.
   I-joists
   Lumber is bonded
   between two pieces of
   oriented strand board.
   Used for floor and roof framing. The
   shape reduces weight and warping.
   Wood
   trusses
   An engineered system of
   wood using triangular
   shapes to create open
   spaces without support.
   Used for roof and floor framing. They
   are relatively low in cost and easily
   handled.

      2. Framing Terminology
      The basic elements of framing can be seen in Figure 7-9.
      A SILL is a horizontal timber that serves as a base for the framework of a building. The sill rests on top of the foundation wall, and serves as the base for the vertical studs, the horizontal floor joists, and all other parts of the frame.
   
      The JOISTS are wooden structural members used to support a floor or ceiling load.
      They rest on the sills or on intermediate support beams.
      STUDS are vertical wood members that provide the support for wall coverings and receive the load from the roof.
   
      A RAFTER is any of a series of beams that support a roof covering.
      The JAMB is the vertical side of a door or window frame.
   
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      Figure 7-9. Framing
   

   Stud
   Rafter
   Joist
   Sill
   3. Framing Methods
   Several different framing methods are used to construct houses. The three basic types are
   balloon framing, platform framing, and post and beam framing (see Figure 7-10).

      a. Balloon Framing
      BALLOON FRAMING is a system in which studs extend in one piece from the sill
      to the roof. It is more labor intensive than the modern platform method. The potential for rapid fire spread through these continuous wall cavities is a safety consideration of this framing method.
   
      b. Platform Framing
      PLATFORM FRAMING is the most common framing method in modern residential
      construction. In platform framing, each story is framed separately. The wall studs are attached to a top and bottom horizontal plate.
   
      c. Post and Beam Framing
      POST AND BEAM FRAMING has heavy posts that support horizontal beams. Each post and beam is spaced wider than regular framing. The result is exposed beams inside, and a need for insulation between roof rafters.
   
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      Figure 7-10. Three Framing Methods
   
      a. Roof Framing
      There are two common systems for constructing roofs: rafter roofs and truss roofs.
   
      i. Rafter Roofs.
   
      RAFTER ROOFS are constructed one rafter at a time on the job site. These types of roofs allow for <a data-bs-toggle="modal" data-bs-target="#questionModal-370422" role="button" aria-label="Open Question" class="keyword-wrapper question-trigger"><span class="keyword-container">greater</span><span class="flag-trigger">❓</span></a> design flexibility.
   
      ii. Truss Roof Systems.
   
      TRUSS ROOF SYSTEMS are pre-engineered and prefabricated off site. The trusses are connected by metal fastener plates, and installed by crane.
   
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      Experienced Appraiser’s Tip:
   
      Truss roof systems generally cannot be altered without seriously affecting their engineered integrity. So, if a house has a truss roof, make note of that fact in the appraisal report, because it will limit future remodeling possibilities.
   
      a. Common Roof Types.
   
      A GABLE ROOF is a roof that slopes in two directions. A DORMER is a window that projects vertically from a sloping roof.
         The roof type will affect the utility of the house. There is typically more usable attic space with a conventional rafter roof, because trusses reduce the open space.
   
      FENESTRATION refers to the design and placement of windows in a building.
      Well-designed fenestration will maximize lighting and ventilation, and make good use of site features such as views. A well-designed exterior will be compatible with the house’s architectural style, and the quality of the finish materials will be consistent with the quality of the house’s construction. Exterior elements of the house include the siding, trim, doors, windows, and roofing.
   
      b. Bamboo Flooring.
      Bamboo flooring is an alternative interior floor finish that has become popular over the last decade.  From a renewable resource, bamboo is relatively soft and will damage easier than other floor finishes.
      The popularity of energy efficiency has made solar collectors and wind generators a more common sight in residential communities. To some buyers these would be desirable amenities. These may also indicate “green” conscious building and materials.
   
      Experienced Appraiser’s Tip:
   
      In areas of solar and wind development, there are three elements to consider when evaluating renewable resources. First, are there any leases for solar and wind access? Second, can the access rights be terminated? Third, what are the values for solar and wind rights separate from the fee simple interest of the <a data-bs-toggle="modal" data-bs-target="#questionModal-370438" role="button" aria-label="Open Question" class="keyword-wrapper question-trigger"><span class="keyword-container">land</span><span class="flag-trigger">❓</span></a>?
   
      There have been many cases where a buyer purchases a solar array, but the house they buy comes with limited access rights to the sun. This severely limits the productivity of their system as well as the property’s value.
   
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      b. Chimneys, Stacks and Vents
      The chimney, stacks and vents of a home play an important role in the construction design.
          * Chimneys – a primary way a home gets rid of carbon monoxide from heating
      sources. They are required for a home that uses wood.
          * Stacks – they are the pipes that emit odors and fumes from the sewage, they run up through the roof to emit the odors into the sky
          * Vents - provide air flow to the house by emitting air throughout the home
   
      4. Sheathing
      After framing, the entire structure is covered with SHEATHING, which is a material used to cover the outer studs, rafters or joists of a structure. Sheathing is made of wood, plywood, or OSB.
   
      C. Exterior Finishes
      Exterior finishes may be wood, masonry (brick, stone, concrete), stucco, vinyl siding, aluminum siding, or a combination. The value of each type of siding will depend on a number of factors.
          * Wood siding must be painted and requires high maintenance.
          * Aluminum must be painted (baked enamel paint is commonly used).
   
      Aluminum does not necessarily require continual maintenance, and can be very durable.
          * Vinyl siding does not require painting, but can be damaged by heat or impact.
   
      Although these are typically lower cost sidings, they are often considered more desirable because they are easily maintained.
          * Brick, stone, and stucco are durable and require very little maintenance. The cost can be very high.
          * Masonry exteriors tend to have superior insulation qualities.
   
      Proper installation and workmanship are important for any type of exterior finish. All surfaces should be straight and smooth, and any joints or seams must be sealed to prevent leakage of moisture. Flashing is used around doors and windows to prevent water from entering around the frames.
   
      The exterior trim should match the siding in type and quality.
      Good quality trim adds to the appeal of the house, but excessive, inappropriate, or poorly installed trim can detract from value.
   
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      D. Doors and Windows
      1. Doors
      Doors may be solid wood, hollow-core wood, metal, or glass. Exterior doors should be solid rather than hollow, and glass doors must be made of safety (tempered) glass. Exterior doors should be at least 36” wide to allow for easy passage of furniture. Minimum door width for interior doors is 30”.
      All exterior doors should have good quality weather-stripping to prevent air leakage.
   
      2. Windows
      Most modern homes use double-pane or MULTIPLE PANE windows to improve energy efficiency. The space between the panes is often filled with an inert gas to further improve insulation. Window frames may be wood, aluminum, vinyl, or wood clad with vinyl or aluminum. Most modern windows can be tilted inward for ease of cleaning.
      There are three basic window styles: double hung, horizontal sliding, and casement (see Figure 7-11).
      A DOUBLE HUNG WINDOW has two sashes that slide up and down in a frame.
   
      A HORIZONTAL SLIDING WINDOW has two or more sashes that slide horizontally in a frame.
      A CASEMENT WINDOW has one or more sashes that are hinged at the side.
   
      Figure 7-11 Types of Windows
   
      Horizontal Sliding
   

   Double Hung
   Casement
   E. Insulation
   Good insulation is essential for controlling heat flow through the house. Insulation is rated according to its R-value, which is a measure of resistance to heat flow: the higher the R-value, the better the insulation. Building codes often specify minimum R- values for exterior walls and ceilings in residential construction.

Insulation materials include:
* fiberglass
* rock wool

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* polystyrene
* cellulose

Where to insulate:
* attics: should have R-38 or greater, to reduce heat loss in the winter and heat gain in the summer
* walls: typically R-11 to R-19, depending on local codes and standards
* floors: typically R-13
* foundation walls: recommended for buildings in cold climates
The type of insulation varies in the above applications. Loose fill (blown) and blanket
(batts) are the most common types of insulation.

F. Ventilation
Proper ventilation is necessary in order to exhaust moisture, fumes, and odors from a house. Ventilation is particularly critical in kitchens and bathrooms, which can become very humid during cooking and bathing activities.

Ventilation is also important in attics and crawl spaces, to help prevent the growth of mold and fungus.

Vents and exhaust fans are used to remove odors and moisture from rooms. Roof vents are also commonly used to remove trapped heat in attics. A good system will also contain an air exchanger, which is an appliance that exhausts bad interior air from the home as well as bringing in fresh air to balance the exhausted air.
The benefits of insulation are reduced when there are air leaks in the structure. Air leaks can be caused by:
* poor quality doors and windows
* lack of caulking
* poor construction details
Vapor barriers also reduce moisture penetration and improve the effectiveness of insulation.

Experienced Appraiser’s Tip:

In most areas with high humidity, appraisers check to make sure there are vapor barriers on the outside of homes. The reverse is true in very dry climates like Arizona, where moisture barriers are used in interiors.

It is more critical than ever for residential buildings to have proper insulation.

The combination of higher heating costs and environmental concerns has greatly increased the value of residential insulation.

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G. Interior Finishes
1. Wall Finishes
Drywall is the most common wall finish in modern houses, with plaster used in older homes, and wood paneling or wainscoting in some rooms. The value of wall finishes depends to a large extent on the quality of the materials and workmanship. Drywall can be spray coated for a textured finish, or TAPPING, a gypsum material is used to smooth the surface of gypsum drywall, and sanded before painting.

2. Floor Finishes
   Floor finishes may be hardwood (the best), carpet, vinyl, tile, stone, or combinations. Wood flooring is costly, but long lasting and esthetically desirable. Laminate flooring is similar in appearance but less expensive. Carpet is relatively low in cost and provides warmth and sound❓ insulation, but wears out easily and tends to retain odors. Sheet vinyl is inexpensive, easy to clean, and has good moisture resistance, but lacks esthetic appeal and wears out quickly. Tile and stone floors are durable and attractive, but tend to be high in cost.

3. Cabinets and Countertops
   Cabinets are an important part of kitchen and bathroom design.
   Cabinets may be site built or factory built. Factory built cabinets often represent a better value, because they are mass produced and come in a variety of styles.
   Cabinet quality depends on the materials and workmanship. Solid wood cabinets are typically higher in quality than pressed wood cabinets, for example, and dovetailed drawers add to the value of a set of cabinets.

Countertop materials include:
* plastic laminate (Formica).
* solid surface materials (Corian).
* ceramic tile.
* stone (granite, marble, slate).
* wood.
* stainless steel.
Countertops are very expensive to replace in a bathroom or kitchen. A bathroom countertop could cost hundreds of dollars where a kitchen countertop could easily run into the thousands of dollars.
The different countertop materials vary in cost and durability. Formica is inexpensive,
but stains and wears out easily. Solid surface countertops are also relatively inexpensive, are esthetically desirable, and can be easily repaired. Ceramic tile countertops are durable, moisture-resistant and attractive, but can be difficult to keep clean (due to the grout lines).
Stone is durable and attractive, but expensive. Wood is attractive but not as durable as other materials.
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4. Interior Trim
Interior trim includes door and window trim (casing), baseboards and crown molding. The quality of the trim is an indication of the overall level of quality of the house. High quality trim is made of solid hardwood, with tight, well-fitted joints, and smooth, attractive finishes. Low quality trim may be made of softwood, may show gaps or visible nail holes, and the surface may be rough or uneven.

H. Plumbing
The plumbing system provides fresh water to the house, and removes waste water.

Plumbing materials include:
* copper pipes, common for water supply
* galvanized steel pipes used in older homes
* plastic pipes, either PVC or ABS, used for drain and waste pipes
* cast iron pipes, used for drain and waste lines in older buildings
The various piping materials differ in cost and durability. Copper is less subject to corrosion than steel or cast iron. Plastic is durable, inexpensive, easy to install, and not subject to corrosion.

Adequate water pressure is an essential consideration in plumbing system design.
Minimum pressure is 40 pounds per square inch (PSI) to avoid having long waits for showers and tub to fill.

Good design includes an adequate number of fixtures:
* at least one bathroom for every two bedrooms
* at least one laundry tub
* at least one outside faucet
* a water heater, to provide a reliable supply of hot water (Note: This is not required by code!)
An 80 gallon capacity is standard in areas with mild climates; higher capacity is necessary in cold climates. Most water heaters use gas or electricity as their energy source. Older buildings may use oil.

The modern trend is to “green” building and materials.

Tankless water heaters are a “green” building trend that save money on heating and water costs and save energy.

The water heater can be located on the property by an ENERGY STAR qualified technician to save hundreds or thousands of gallons a year.

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I. Heating and Air Conditioning
Heating and air conditioning systems vary in terms❓ of both type and fuel. The three basic types of heating systems are:
* central forced-air systems
* hot water (hydronic) systems
* electric systems

The most common fuels for heating are:
* natural gas
* electricity
* oil
* propane

Electric resistance heat is relatively inexpensive to install, but more costly to operate.
Hot water heat is quiet and comfortable, but more expensive than forced air.
Air conditioning may be provided by a central cooling system, or by individual room air conditioners. The two most common types of central air conditioning are:
* conventional air conditioning
* heat pumps
Modern heat pumps also reverse cycle for heating and are very efficient in operation.

J. Electrical
The electrical system must be adequate to supply the needs of the household.
Minimum service to a house should be at least 100 amps. Large houses with electric appliances may require 200 amp or higher service.
The wiring should be copper. Aluminum wiring was common in the 1960’s and 1970’s,
but was found to have a tendency to corrode and overheat, which can result in fire.
If aluminum wiring is encountered in a house, its connections should be inspected and regularly maintained.

The electrical system should be equipped with circuit breakers, or with fuses. A circuit breaker is a safety device that will automatically “trip” and shut off power to a particular circuit when it becomes overloaded.
For safety, outlets in kitchens and bathrooms, and all exterior outlets, should be equipped with ground fault interrupters (GFIs), which trip if an electrical short is detected. There must be adequate electrical outlets. Modern design typically calls for outlets every six to eight feet.

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K. Quality
The cost of a structure is the total of three quality categories.

1. Quality and Design of Materials.
   One can choose high cost materials for low-cost structures or low-quality design materials on high cost structures, thus, the quality is very important for the proper and sound construction of a building.

2. Workmanship.
   Excellent craftsmanship is essential for maximizing the value of even a modest house. On the other hand, high-quality materials can be devalued by poor workmanship.

3. Equipment.
   All electrical and mechanical systems should be adequate to serve the needs of the residents. These systems should be properly maintained. In most jurisdictions, building codes require inspections of systems at the time of original installation. A periodic inspection and servicing is a sign of property upkeep.

Experienced Appraiser’s Tip:

The market is increasingly valuing the sustainability of housing, and the overall quality of an existing house is not only dependent on the workmanship, quality of material, and equipment but if GREEN TECHNOLOGY was integrated throughout the home’s design.

Green homes that conserve and harness more energy-efficient equipment and methods can attract more value.

More and more materials can be recycled, or derived from REWABLE SOURCES. These are increasingly desired features in a home.

A home that utilized passive solar heating and cooling can be cost-effective, energy efficient, and environmentally❓ friendly.

There has been significant growth in energy efficient equipment and alternative energy source products that conserve natural resources and reduce waste and pollution. Appraisers and other real estate professions must become more knowledgeable and educated regarding this movement, because as it grows, it will affect all aspects of value in real estate.

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V. CHAPTER SUMMARY
I. Houses are commonly classified by type, architectural style and quality.

A. The basic house types are:

1. one-story
2. one and one-half story
3. two-story
4. split-level
5. bi-level

B. The key to good architectural design is compatibility:
1. compatibility with other properties in the area
2. compatibility with the site
3. compatibility with the materials
4. compatibility with market demand

II. Elements of house design include:
A. Siting
1. orientation to sun
2. orientation to storm winds
3. orientation to views
4. division of lot into functional zones

B. Interior functional zones
1. living zone
2. working zone
3. sleeping zone
4. circulation zone

C. Room characteristics
1. Room sizes should be adequate for the use and compatible with the overall size of the house.
2. Room location should provide convenient access and adequate separation of incompatible activities.
3. Room layout should allow for flexible arrangement of furniture.
4. Each room should have adequate lighting and ventilation.

Ill. Construction methods and materials
A. Foundation
1. materials: concrete, block, wood
2. types: basement, pier and beam, slab on grade

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B. Framing and Sheathing
1. materials: lumber (dimensioned, engineered)
2. types: balloon, platform, post and beam
3. roof types: rafter, truss
C. Exterior finishes
1. siding materials: wood, metal, stucco, masonry, vinyl
2. trim: wood, metal, composite

D. Doors and windows
1. materials: wood, metal, glass
2. door type: solid core, hollow core, glass
3. window type: double hung, horizontal sliding, casement, picture

E. Insulation (R-value)
1. materials: fiberglass, rock wool, polystyrene
2. locations: attic, walls, floors, foundations
3. types: loose fill, blanket
F. Ventilation
G. Interior finishes
1. wall finishes: drywall, plaster, paneling
2. floor finishes: wood, carpet, tile, vinyl
3. cabinets and countertops: plastic, wood, laminate, tile, solid surface
4. trim: wood, metal, composite
H. Plumbing materials: copper, steel, plastic
I. Heating and air conditioning
1. types: forced-air, hot water, electric
2. fuel: gas, oil, electricity, solar

J. Electrical
1. amperage: 100 amp minimum, 200 amp preferred
2. materials: copper or aluminum wire
3. circuit breakers or fuses
4. GFIs in baths and kitchens

K. Quality
1. materials, workmanship, and equipment must be suited to intended use
2. level of maintenance and upkeep, both deferred and cosmetic, as it impacts the current value of the structure
3. proper integration of energy efficient materials to reduce costs, environmental impact and enhance value.

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VI. CHAPTER QUIZ
1. Which of the following types of houses has the greatest amount of living space in relation to the amount of foundation?

a. One-story
b. One and one-half story
c. Two-story
d. Split-entry

2. Architectural style:

a. has a major impact on construction cost.
b. has a major impact on value.
c. has no impact on value as long as the design is compatible with the neighborhood.
d. affects value as long as the design is compatible with the neighborhood.

3. Good siting involves which of the following considerations?
   a. Maximizing south-facing window area
   b. Minimizing window area facing prevailing storm winds
   c. Placement of living areas to capture territorial views
   d. All of the above

4. The three basic interior functional zones of a house are:

a. living, working, sleeping.
b. public, private, circulation.
c. living, working, traffic.
d. public, private, service.

5. An adequate number of bathrooms in a house would be:

a. at least one for every three bedrooms.
b. at least one for every two bedrooms.
c. as many as the buyer wants.
d. dependent on the cost.

6. Which of the following would be most susceptible to corrosion?

a. Copper pipes
b. Plastic pipes
c. Galvanized steel pipes
d. None of the above

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7. Which of the following framing methods is least expensive and most commonly used in modern residential construction?

a. Platform framing
b. Balloon framing
c. Post and beam framing
d. Poured concrete framing

8. Which of the following types of siding is most durable?

a. Wood siding
b. Aluminum siding
c. Vinyl siding
d. Masonry siding

9. The insulating value of building materials is described by its:

a. R-factor.
b. EMF rating.
c. voltage.
d. conductivity.

10. For safety, electrical outlets located in kitchens and bathrooms should be:

a. three-way outlets.
b. four-way outlets.
c. GFI outlets.
d. polarized outlets.

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Chapter 8 cost approach❓
KEY WORDS AND TERMS
Accrued Depreciation
Actual Age
Comparative-Unit Method
Cost Approach
Cost Service
Cureable Depreciation
Depreciation
Design Deficiency
Economic Life
Effective Age
External Obsolescence
Functional Obsolescence
Index Method
Incurable Depreciation
Obsolescence
Physical Deterioration
Quantity Survey Method
Remaining Economic Life
Replacement Cost
Reproduction Cost
Square Foot Method
Unit-in-Place Method
Useful Life
LEARNING OBJECTIVES
Appraisers estimate value using the cost approach. The cost approach to valuation assumes that the value of property is indicated by the value of the site, plus the cost (new) to construct the improvements, less any depreciation that the improvements have suffered.
The steps used in the cost approach are:

1. Estimate the value of the site, as if vacant and available for its highest and best use.
2. Estimate the reproduction or replacement cost of the improvements.
3. Estimate accrued depreciation.
4. Deduct the accrued depreciation from the reproduction or replacement cost of the improvements.
5. Add the land value to the depreciated cost of the improvements to arrive at the final estimate of value.

After completing this chapter, you should be able to:
1. understand the underlying assumptions of the cost approach,
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2. list the data that is necessary to estimate reproduction or replacement cost,
3. describe the methods for estimating reproduction or replacement cost,
4. define the term depreciation, and describe the three categories of depreciation,
5. understand the techniques that are used to estimate physical deterioration,
6. understand the techniques that are used to estimate functional obsolescence, and
7. understand the techniques that are used to estimate external obsolescence.

CHAPTER OUTLINE
I. THE COST APPROACH (p. 251)
A. Underlying Assumptions (p. 251)
B. When to Use (p. 252)
II. ESTIMATING REPRODUCTION OR REPLACEMENT COST (p. 252)
A. Cost Service (p. 253)
B. Direct Costs and Indirect Costs (p. 253)
C. Methods of Cost Estimation (p. 254)
1. Comparative-Unit Method (p. 254)
2. Square Foot Method (p. 254)
3. Unit-in-Place Method (p. 255)
4. Quantity Survey Method (p. 256)
5. Index Method (p. 256)
III. ACCRUED DEPRECIATION (p. 256)
A. Useful Life vs. Economic Life (p. 257)
B. Actual Age vs. Effective Age (p. 257)
C. Classifying Depreciation (p. 258)
1. Physical Deterioration (p. 258)
2. Functional Obsolescence (p. 260)
3. External Obsolescence (p. 262)
D. Curable and Incurable Depreciation (p. 262)
IV. AGE-LIFE DEPRECIATION METHOD (p. 263)
V. BREAKDOWN METHOD (p. 264)
VI. FINAL STEPS IN THE COST APPROACH (p. 265)
VII. CHAPTER SUMMARY (p. 265)
VIII. CHAPTER QUIZ (p. 267)
I. The Cost Approach
The COST APPROACH assumes that the value of improved property is indicated by the value of the site, plus the cost (new) to construct the improvements, less any depreciation that the improvements have suffered. Depreciation is the difference in value between the cost (new) of the improvements and their current value, regardless of the reasons for the difference.
The cost approach can be expressed by the formula:
Property Value of Site (by Cost Approach)

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A. Underlying Assumptions
The cost approach is most reliable when the improvements are relatively new, since it is more difficult to estimate depreciation for older buildings.
The theory underlying the cost approach is that an informed purchaser will pay no more for a property than the cost of building it (or buying a similar one), assuming no undue delays or extraordinary expenses.
In theory, the appraiser could calculate a value based on either the REPRODUCTION COST or the REPLACEMENT COST of the improvements, with depreciation taken into account in either case.
REPRODUCTION COST is the cost of creating a duplicate, including any features, design or materials that are outmoded, based on current prices.
REPLACEMENT COST is the cost of replacing or creating an equivalent utility, based on current prices. In both cases, the cost used is the cost (new) as of the effective date of the appraisal.
Replacement cost is more commonly used than reproduction cost, because it more accurately reflects the way that buildings are actually valued in the marketplace. Replacement cost is the cost of building a substitute structure that has equivalent utility but is constructed with modern materials and according to current standards, design, and layout.

Case/Example: To properly estimate the replacement cost of a building, the appraiser must know details such as the square footage of the building, type of foundation, roof style, exterior and interior finishes, number and type of rooms, type of heating and cooling, and number of plumbing and electrical fixtures.
Many appraisers use mobile data gathering apps that provide this service for them.

The underlying assumptions