Functional obsolescence in real estate refers to a loss in value due to:
Why Outdated design, features, or layout within the property Is Correct
Answer C: Outdated design, features, or layout within the property
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.
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- External obsolescence affecting an Arizona property's value might be caused by:Property Valuation
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- Functional obsolescence in a property is BEST illustrated by:Property Valuation
- Functional obsolescence in an appraisal refers to:Property Valuation
Key Terms to Know
A reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Math Concepts
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