Property ValuationIntermediateAlabama Exam

Which type of accrued depreciation is considered 'incurable'?

ADeferred maintenance such as peeling paint

BA leaky roof that can be repaired cost-effectively

CExternal obsolescence caused by a nearby factoryCorrect

DAn outdated kitchen that can be modernized

Why External obsolescence caused by a nearby factory Is Correct

Answer C: External obsolescence caused by a nearby factory

External obsolescence is almost always considered incurable because the cause of the value loss is outside the property — the owner cannot fix a nearby factory or highway. Incurable depreciation cannot be repaired at a cost less than the benefit gained.

Exam Tip: Property Valuation

Valuation questions focus on the three approaches to value: sales comparison, cost, and income. Know which approach is best for which property type. The income approach uses cap rate and NOI — memorize these formulas.