Property Valuation
In Connecticut, a property with a 'split-level' design in a neighborhood where all homes are ranch-style may suffer from which type of depreciation?
APhysical deterioration
BExternal obsolescence
CFunctional obsolescence due to design mismatch with market✓ Correct
DCurable depreciation only
Explanation
A split-level home in a market that strongly prefers ranches may suffer functional obsolescence due to a design element considered undesirable or inconsistent with the market—reducing its value relative to conforming homes.
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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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