Property ValuationIntermediateDelaware Exam

What is 'functional utility' in property appraisal?

AThe ability of a property to generate rental income
BThe usefulness and desirability of a property's design, layout, and features relative to current market standardsCorrect
CThe number of functional systems (HVAC, plumbing, electrical) in proper working order
DThe ability of the land to support the intended use without additional engineering

Why The usefulness and desirability of a property's design, layout, and features relative to current market standards Is Correct

Answer B: The usefulness and desirability of a property's design, layout, and features relative to current market standards

Functional utility refers to how well a property's design, layout, and features meet the needs and preferences of the current market. High functional utility contributes positively to value; functional deficiencies cause functional obsolescence.

Exam Tip: Property Valuation

Valuation questions focus on the three approaches to value: sales comparison, cost, and income. Know which approach is best for which property type. The income approach uses cap rate and NOI — memorize these formulas.

Key Property Valuation Terms in This Question

Appraisal

A professional estimate of a property's market value prepared by a licensed or certified appraiser.

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