Property ValuationIntermediateArizona Exam

When an Arizona appraiser says a property has 'deferred maintenance,' this means:

ARoutine maintenance tasks not yet needed but projected to become necessary within the next 5 years based on the property's age and condition at inspection

BNeeded repairs and maintenance that have been postponed, reducing the property's condition and valueCorrect

CMaintenance work completed by the property owner in advance of its scheduled timing, creating excess value that an appraiser must account for as a positive adjustment

DRepair and maintenance costs that have been contractually deferred to the buyer through an escrow holdback arrangement at the time of the real estate closing

Why Needed repairs and maintenance that have been postponed, reducing the property's condition and value Is Correct

Answer B: Needed repairs and maintenance that have been postponed, reducing the property's condition and value

Deferred maintenance refers to needed repairs and routine maintenance that have been neglected or postponed. It is a form of curable physical deterioration—items that should be corrected and whose cost of repair is less than 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

Escrow

A neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.

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Key Terms to Know

Appraisal

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

Comparable Sales (Comps)

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

Depreciation

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

Contingency

A condition in a purchase contract that must be satisfied before the sale can proceed to closing.

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