Property Valuation
Physical depreciation that cannot be economically repaired is classified as:
ACurable physical deterioration
BIncurable physical deterioration✓ Correct
CFunctional obsolescence
DExternal obsolescence
Explanation
Incurable physical deterioration refers to physical wear and tear that is not economically feasible to repair — the cost to cure exceeds the resulting value increase. It is deducted in the cost approach.
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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.
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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