Property Valuation
A Missouri appraiser notes that a property in the St. Louis metro has 'curable deferred maintenance' of $8,000. This means:
AThe property cannot be sold for $8,000 less than market
BThe cost to fix the maintenance items ($8,000) is less than the value added, so repair is economically justified✓ Correct
CThe seller must repair the items before closing
DThe appraiser will deduct $8,000 from market value
Explanation
Curable depreciation means the cost to fix the items is less than the value they add. The appraiser identifies these items and reflects their impact in the cost approach depreciation analysis.
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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.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
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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