Property Valuation
Which type of depreciation is generally considered incurable in Michigan appraisal?
APhysical deterioration that is deferred maintenance
BExternal (economic) obsolescence caused by factors outside the property✓ Correct
CFunctional obsolescence from a curable design deficiency
DPhysical deterioration that is short-lived
Explanation
External (economic) obsolescence is almost always incurable because the cause is outside the property — a new landfill, highway, or market decline cannot be fixed by the property owner.
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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.
Listing AgreementA contract between a property owner and a real estate broker that authorizes the broker to market and sell the property.
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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