Property Valuation
The effective age of a Maryland building refers to:
AThe year the building was originally constructed
BThe age indicated by the building's condition and utility, which may differ from its actual chronological age✓ Correct
CThe remaining economic life of the building
DThe age at which the building should be replaced
Explanation
Effective age reflects the building's physical condition and functional utility. A well-maintained older building may have a lower effective age than its chronological age; a poorly maintained newer building may have a higher effective age.
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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.
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