Property Valuation
What is 'depreciation' in real estate appraisal and what are its three types?
ATax deduction for property improvements; straight-line, accelerated, bonus
BLoss in value from any cause; physical deterioration, functional obsolescence, external obsolescence✓ Correct
CThe reduction of loan principal; amortized, accelerated, deferred
DLoss of rental income; vacancy, credit loss, collection loss
Explanation
In appraisal, depreciation is any loss in value from any cause. The three types are: physical deterioration (wear and tear), functional obsolescence (outdated features), and external (economic) obsolescence (outside forces).
People Also Study
Related Kansas Questions
- In Kansas, 'physical deterioration' of a property that results in loss of value is categorized as either:Property Ownership
- What is 'external obsolescence' (economic obsolescence) in Kansas property appraisal?Property Valuation
- Economic obsolescence (external obsolescence) is caused by:Property Valuation
- External obsolescence in real estate appraisal is caused by:Property Valuation
- Physical deterioration in a Kansas property appraisal refers to:Property Valuation
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.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Math Concepts
Study This Topic
Practice More Kansas Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Kansas Quiz →