What type of depreciation is the most challenging to correct?
Question & Answer
Review the question and all answer choices
Functional.
Functional obsolescence (e.g., outdated layouts or systems) is often curable through remodeling or modernization, so it is not the hardest type of depreciation to correct.
Economic obsolescence.
Physical.
Physical deterioration can typically be remedied through maintenance, repair, or replacement, making it a curable form of depreciation rather than the hardest to correct.
Wear and tear.
Wear and tear is a subset of physical deterioration and is generally curable through ordinary repairs, so it is not the most challenging form of depreciation to address.
Why is this correct?
Economic (external) obsolescence is loss in value caused by factors outside the property's boundaries — adverse zoning, neighborhood decline, nearby nuisances, or market conditions — that the owner cannot remedy on-site. Because the cause is external and uncontrollable, it is generally considered incurable and therefore the most difficult form of depreciation to correct.
Continue Learning
Explore this topic in different formats
More property-valuation-financial-analysis Videos
Continue learning with related video lessons
All of the following affect real estate values in subsequent years, except:
2:41 • 0 views
The appraisal approach that estimates value by comparing a property to similar recently sold properties is the:
2:41 • 0 views
An important characteristic of land is that it may be modified or improved. Such improvements tend to increase the value of real estate. Which of the following is NOT an improvement?
2:07 • 0 views
Which of the following is the least important factor used to determine the market value of a property?
2:48 • 0 views
The appraisal process which allocates a percentage of a property’s total value to the land and a percentage to the improvements is known as:
2:25 • 0 views
Ready to Ace Your Real Estate Exam?
Access 2,000+ free video lessons covering all 11 exam topics.