Property Valuation
What is 'accrued depreciation' in the cost approach to a Delaware appraisal?
AAnnual depreciation accruing each year for tax purposes
BThe total loss in value from all causes (physical, functional, external) as of the appraisal date✓ Correct
CDepreciation that has been deferred and not yet recognized
DThe accumulated property tax unpaid as of the appraisal date
Explanation
Accrued depreciation in appraisal is the total loss in value from all sources — physical deterioration, functional obsolescence, and external obsolescence — as measured from the new construction value to the property's current value.
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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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