Which of the following correctly identifies the three types of depreciation recognized in real estate appraisal?
Correct Answer
A) Physical deterioration, functional obsolescence, and external obsolescence
Appraisers recognize three types of depreciation: (1) Physical deterioration — loss in value from wear and tear, deferred maintenance, or aging of the structure; (2) Functional obsolescence — loss in value due to outdated design, layout, or features that no longer meet current market standards; and (3) External (economic) obsolescence — loss in value caused by forces outside the property, such as a nearby highway, industrial facility, or in Iowa, a confined animal feeding operation (CAFO). Each type may be curable or incurable depending on whether the cost to cure is justified by the resulting value increase.
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Related Concepts
The income approach estimates a property's value based on the income it generates by converting net operating income into a value estimate using a capitalization rate. It is the preferred method for income-producing properties.
Many states have laws to limit how much property taxes can increase each year, regardless of market value fluctuations.
Various programs and exemptions exist to reduce the property tax burden for specific groups, such as seniors, homesteaders, or veterans.
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In Utah, property taxes are collected by which governmental entity?
In Utah, how is a primary residence assessed for property tax purposes under the residential exemption?
Which of the following best describes how Utah's rapid population growth, driven partly by Silicon Slopes tech expansion, has affected housing affordability?
When appraising a property in Utah's Wasatch Front, which environmental hazard would an appraiser need to consider that is less common in most other states?
The rapid growth of the 'Silicon Slopes' tech corridor in Utah has most directly affected real estate in which area?
- → The income approach to appraisal is most commonly used for which type of property?
- → Which formula correctly calculates the capitalization rate?
- → External obsolescence in Oklahoma:
- → The sales comparison approach to appraisal is most appropriate for which type of property?
- → Which of the following correctly lists the three types of depreciation recognized in real estate appraisal?
- → The sales comparison approach to appraisal is most commonly used for which type of property?
- → Which four tests must a use satisfy to qualify as the highest and best use of a property?
- → Three depreciation:
- → Cap rate:
- → Which formula best represents the cost approach to appraisal?
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