Real Estate Exam [California] 23, Cost Approach and Depreciation
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This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams.
In this episode you will learn:
- The core formula for the cost approach: (Replacement/Reproduction Cost - Accrued Depreciation + Land Value = Property Value).
- The critical difference between replacement cost (same utility, modern materials) and reproduction cost (exact replica).
- The three types of depreciation tested on the exam: physical deterioration, functional obsolescence, and external obsolescence.
- How to distinguish between curable (economically feasible to fix) and incurable depreciation, and why external obsolescence is always incurable.
- When the cost approach is the most appropriate valuation method: for new construction and special-purpose properties like schools or churches.
For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep
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