Property Valuation
Which type of depreciation in an appraisal is considered incurable because the cost to cure exceeds the value added?
ACurable physical deterioration
BIncurable physical deterioration✓ Correct
CCurable functional obsolescence
DExternal obsolescence
Explanation
Incurable physical deterioration involves wear or decay that is too expensive to fix relative to the value it would add. It reduces the property's value but is not economically worthwhile to correct.
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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.
Math Concepts
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