Property Valuation
Which type of depreciation is considered incurable because repair costs exceed the value added?
APhysical deterioration — curable
BFunctional obsolescence — curable
CPhysical deterioration — incurable✓ Correct
DEconomic obsolescence — curable
Explanation
Incurable physical deterioration refers to physical wear that is too costly to repair relative to the value it would add, making repair economically infeasible.
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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.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Math Concepts
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