Property Valuation
In Hawaii, 'economic obsolescence' that affects all properties in a neighborhood is called:
AA. Individual obsolescence
BB. Area-wide or locational obsolescence✓ Correct
CC. Curable physical deterioration
DD. Functional obsolescence
Explanation
When external factors affecting value (such as a new highway, industrial development, or economic decline) affect an entire area, it is called area-wide or locational external 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.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
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.
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