Property ValuationIntermediateArizona Exam

In Arizona, 'functional obsolescence' in appraisal refers to:

APhysical deterioration caused by deferred maintenance and accelerated wear on structural systems such as roofing, HVAC, and plumbing components

BLoss in value due to deficiencies or super-adequacies in the property itself—features that are outdated, inadequate, or excessive relative to current market expectationsCorrect

CValue loss attributable to nearby land uses outside the property's boundaries, such as proximity to commercial traffic or incompatible zoning districts

DDepreciation measured by applying the property's effective age to the economic life table used in the cost approach to calculate accrued depreciation

Why Loss in value due to deficiencies or super-adequacies in the property itself—features that are outdated, inadequate, or excessive relative to current market expectations Is Correct

Answer B: Loss in value due to deficiencies or super-adequacies in the property itself—features that are outdated, inadequate, or excessive relative to current market expectations

Functional obsolescence is value loss from the property's own functional deficiencies (e.g.

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.

Zoning

Local government regulations that control land use by dividing areas into zones specifying permitted uses, building sizes, and densities.

People Also Study

Key Terms to Know

Depreciation

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

Appraisal

A 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.

Comparable Sales (Comps)

Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.

Math Concepts

Depreciation Profit & Loss

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