Property Valuation
In an appraisal, what is the term for a loss in value from any cause?
AAmortization
BDepreciation✓ Correct
CCapitalization
DObsolescence
Explanation
Depreciation in appraisal refers to a loss in value from any cause, including physical deterioration, functional obsolescence (outdated features), and external (economic) obsolescence.
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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.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
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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