Property Valuation
Economic life of a building refers to:
AThe physical life span of the structure until complete deterioration
BThe period during which the building contributes positively to property value✓ Correct
CThe number of years since the building was constructed
DThe number of years remaining on the building's depreciation schedule for tax purposes
Explanation
Economic life is the period during which the improvement (building) adds value to the property — the useful life from the market's perspective. It is typically shorter than physical life. When the land would produce more value vacant than improved, the building has exhausted its economic life.
Related Alaska Property Valuation Questions
- Uniform Standards of Professional Appraisal Practice (USPAP) apply to Alaska appraisers and require:
- Curable depreciation in a property appraisal means:
- Which of the following is TRUE about the principle of conformity in real estate appraisal?
- An appraiser uses the cost approach for a property and estimates reproduction cost new at $380,000, land value at $75,000, and total depreciation at $55,000. What is the estimated value?
- A commercial property in Juneau generates $120,000 in NOI annually. The prevailing cap rate for similar properties is 8%. What is the estimated value?
- In Alaska, the 'income multiplier' approach is less precise than direct capitalization because it:
- In Alaska, the 'market data approach' (sales comparison approach) works best when:
- A licensee in Alaska performing a comparative market analysis (CMA) is:
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