Which of the following correctly lists the three types of depreciation recognized in real estate appraisal?
Correct Answer
A) Physical deterioration, functional obsolescence, and external obsolescence
In real estate appraisal, the three recognized types of depreciation are: (1) Physical deterioration — wear and tear on the property; (2) Functional obsolescence — loss in value due to outdated design, features, or layout; and (3) External (economic) obsolescence — loss in value caused by factors outside the property, such as neighborhood decline or adverse zoning changes.
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