Certified Residential Appraiser Practice Exam

What does salvage value refer to?

1. The value of unsold property in a real estate auction

2. The expected price for a property when sold at auction

3. The price expected for a whole or part of a property removed for use elsewhere

4. The appraised value as determined by a local government

The correct answer is: The price expected for a whole or part of a property removed for use elsewhere

Salvage value refers specifically to the anticipated residual value of an asset at the end of its useful life, particularly relating to the part that can be sold or repurposed after it has served its intended purpose. This concept is commonly used in real estate and other asset appraisal as it signifies the potential financial return from materials or components that can be extracted from a property, whether in whole or part. This aligns with how salvage value is often considered in various assessments, including depreciation calculations in accounting, as well as in evaluating the overall worth of an asset. By focusing on the future use or resale of the property or its components, it allows appraisers to make informed decisions regarding the asset’s total value. The other options provided do not accurately capture this essence; they instead relate to different valuation contexts, such as auction sales or governmental assessments, which do not focus on the residual value aspect that salvage value embodies.