An appraiser in California is evaluating a 40-year-old home near the San Andreas Fault in the Bay Area. The home has outdated plumbing that does not meet current California building codes. In the cost approach, this outdated plumbing is classified as what type of depreciation?
Correct Answer
D) Functional obsolescence — curable
Outdated plumbing that does not meet current California building codes is classified as functional obsolescence — curable. It is 'functional' because the issue relates to the design or utility of the improvement (not physical wear), and it is 'curable' because it is economically feasible to update the plumbing to meet current code requirements. In California, building code requirements are enforced by local jurisdictions under the California Building Standards Code (Title 24).
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Previous Question
A California appraiser estimates a 30-year-old home in Pasadena has a total economic life of 60 years. The replacement cost new of the improvements is $540,000. The land value is $620,000. Using the age-life method of depreciation, what is the estimated property value?
Next Question
A California appraiser is valuing a 20-year-old commercial building in downtown Sacramento using the cost approach. The replacement cost new is $1,800,000. The appraiser identifies: physical deterioration of $360,000, functional obsolescence (curable) of $90,000 for an outdated HVAC system, and external obsolescence of $150,000 due to a nearby California high-speed rail construction zone that creates noise. The land value is $950,000. What is the indicated value using the cost approach?