Property ValuationIntermediateDelaware Exam
Which type of depreciation in an appraisal is caused by wear and tear from use and aging of a building?
AExternal obsolescence
BFunctional obsolescence
CPhysical deteriorationCorrect
DEconomic obsolescence
Why Physical deterioration Is Correct
Answer C: Physical deterioration
Physical deterioration refers to the loss in value due to wear and tear, aging, and deferred maintenance. It can be curable (economically feasible to repair) or incurable.
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
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