Florida Real Estate Practice Exam

Which situation represents the reproduction cost in the cost approach to value?

1. Rebuilding with similar materials, square footage, and design after a fire

2. Rebuilding a mansion with repurposed materials to match its pre-hurricane state

3. Building a similar but more environmentally friendly home in a different location

4. Building a similar but smaller house for personal use

The correct answer is: Rebuilding a mansion with repurposed materials to match its pre-hurricane state

The reproduction cost in the cost approach to value is the cost to rebuild a property using the same materials, square footage, and design as the original structure. Option A is incorrect because it states "similar materials" which means they may not be an exact replica, making it a replacement cost. Option C is incorrect because it mentions building a "similar but more environmentally friendly home", which implies changes from the original design and materials. Option D is incorrect because the reason for building a smaller house is for personal use, rather than rebuilding an existing structure. Option B is the correct answer because it states the cost to rebuild a property with repurposed materials to match its pre-hurricane state, which aligns with the definition of reproduction cost.