Property Valuation
In Delaware, what does 'physical life' of a building mean in appraisal?
AThe number of years the building has been occupied
BThe total period from construction until the structure is no longer physically sound✓ Correct
CThe life expectancy determined by FEMA flood zone maps
DThe useful life for tax depreciation purposes
Explanation
Physical life is the total period during which a structure remains physically sound and standing, from construction to the point when it can no longer be maintained cost-effectively. It is generally longer than the economic life.
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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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