Certified Relocation Professional (CRP) Practice Exam

In the ERC report on home sale program costs, how are repairs and capital improvements categorized?

1. Loss on sale expenses

2. Miscellaneous selling costs

3. Monetary concessions

4. Non-recurring carrying costs

The correct answer is: Non-recurring carrying costs

In the context of the ERC report on home sale program costs, repairs and capital improvements are categorized as non-recurring carrying costs. This classification is appropriate because these costs are not considered ongoing operational expenses but rather specific, one-time expenses that are incurred to maintain or enhance the value of a property during the selling process. Non-recurring carrying costs typically include those expenses that arise in the period when the property is on the market, such as repair costs that are necessary to ensure the property is sale-ready or capital improvements that may increase the property's appeal to prospective buyers. By categorizing them this way, stakeholders can better assess the financial impacts directly associated with the sale of the home, separate from other types of costs that might be recurrent or more fluid in nature. Other classifications such as loss on sale expenses, miscellaneous selling costs, or monetary concessions focus on different aspects of the sale process, like the actual financial loss from the sale relative to its market value or incentives offered to buyers. These do not accurately capture the one-time nature of repairs and capital improvements, which is why this categorization as non-recurring carrying costs aligns best with the definition and purpose of these expenses in the context of home sale programs.