Property ValuationIntermediateArizona Exam

Effective age in appraisal refers to:

AThe actual chronological age of the improvement calculated from the date the certificate of occupancy was first issued for the structure
BThe age indicated by the improvement's condition and utility relative to similar propertiesCorrect
CThe age at which the building becomes legally required to be demolished under Arizona's building code mandatory modernization program
DThe age used by the Internal Revenue Service for calculating straight-line depreciation on residential income property under IRC Section 168

Why The age indicated by the improvement's condition and utility relative to similar properties Is Correct

Answer B: The age indicated by the improvement's condition and utility relative to similar properties

Effective age is based on the condition and remaining economic utility of the improvement, not its actual age. A well-maintained older building may have a lower effective age than its chronological age.

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.

Key Property Valuation Terms in This Question

Appraisal

A professional estimate of a property's market value prepared by a licensed or certified appraiser.

Depreciation

A reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.

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