In Arizona, the 'cost to cure' approach in appraisal means:
Why The cost to correct a specific physical or functional deficiency, which equals the depreciation only if the cure cost does not exceed the resulting value increase Is Correct
Answer B: The cost to correct a specific physical or functional deficiency, which equals the depreciation only if the cure cost does not exceed the resulting value increase
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
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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.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Math Concepts
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