Property Valuation
Effective age in a Colorado appraisal differs from actual age because effective age reflects:
AThe year the property was first listed on the MLS
BThe property's condition relative to similar properties, regardless of chronological age✓ Correct
CThe IRS's depreciation schedule for the property
DThe number of years remaining on the building permit
Explanation
Effective age is based on the property's condition and functional utility, not its chronological age. A well-maintained older home may have a lower effective age than its actual age, while a poorly maintained newer home may have a higher effective age.
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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.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
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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