Property Valuation
In a Michigan appraisal, the 'cost to cure' refers to:
AThe cost to renovate the entire property
BThe expense required to correct a specific curable depreciation item✓ Correct
CThe cost of environmental remediation
DThe appraiser's fee for correcting a report error
Explanation
Cost to cure is the estimated expense to repair or remedy a specific defect causing curable depreciation. If the cost to cure is less than the value it adds, the depreciation is curable; if the cost exceeds the benefit, it is incurable.
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Key Terms to Know
Appraisal
A professional estimate of a property's market value prepared by a licensed or certified appraiser.
DepreciationA reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Math Concepts
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