Property Valuation
A cost approach appraisal requires calculating depreciation, which includes:
AOnly physical deterioration
BOnly functional obsolescence
CPhysical deterioration, functional obsolescence, and external obsolescence✓ Correct
DOnly economic obsolescence
Explanation
Total depreciation in the cost approach includes all three forms: physical deterioration (physical wear), functional obsolescence (outdated design), and external (economic) obsolescence (external factors). All applicable forms must be estimated.
Related Arizona Property Valuation Questions
- The cost approach to value starts with:
- The principle of substitution states that:
- The sales comparison approach to value is MOST appropriate for:
- A property in Arizona has a gross rent multiplier (GRM) of 120 and rents for $1,800 per month. What is the estimated value using the GRM method?
- In the income approach, a property generates $36,000 annual net operating income (NOI). If the capitalization rate is 6%, what is the estimated value?
- Functional obsolescence in a property is BEST illustrated by:
- External obsolescence affecting an Arizona property's value might be caused by:
- Which of the following BEST defines 'highest and best use' of a property?
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