Property Valuation
In Hawaii, which appraisal term refers to the loss in value from all causes, both internal and external?
AA. Net operating income
BB. Accrued depreciation✓ Correct
CC. Economic obsolescence
DD. Functional obsolescence
Explanation
Accrued depreciation is the total loss in value from all causes—physical deterioration, functional obsolescence, and external (economic) obsolescence—measured from the current date.
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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.
Net Operating Income (NOI)The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
Math Concepts
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