Property Valuation
Depreciation in real estate appraisal (for the cost approach) is defined as:
AThe annual decline in assessed value
BAny loss in value from any cause, including physical deterioration, functional obsolescence, and external obsolescence✓ Correct
CThe mortgage interest deduction on income taxes
DThe reduction in selling price due to market conditions
Explanation
In the cost approach, depreciation is any loss in value from any cause affecting the improvement from its cost new. It includes: physical deterioration (wear and tear, deferred maintenance), functional obsolescence (outdated design), and external obsolescence (outside factors).
Related Minnesota Property Valuation Questions
- In the cost approach to value, the appraiser estimates:
- Regression and progression are appraisal principles related to:
- The principle of substitution states that:
- In a declining market, a Minnesota appraiser using the sales comparison approach should:
- In Minnesota, the 'reconciliation' step in the appraisal process involves:
- In Minnesota, an 'as-is' appraisal reflects the property's value:
- In Minnesota, an appraisal report that meets USPAP requirements for mortgage lending purposes is typically presented as a(n):
- Which of the following would be the BEST comparable for a 3-bedroom, 2-bath, 1,500 sq ft ranch home in Burnsville, Minnesota?
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