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
The three types of depreciation in real estate appraisal are: (1) Physical deterioration — wear and tear from use and aging; (2) Functional obsolescence — loss in value due to outdated or inadequate features within the property; and (3) External (economic) obsolescence — loss in value caused by negative forces outside the property, such as nearby industrial development or economic decline. Each type may be curable or incurable.
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