Property Valuation
When appraising a New Mexico property, the appraiser uses the 'before and after' method for which type of loss?
APhysical deterioration
BFunctional obsolescence
CExternal obsolescence caused by a partial taking by eminent domain✓ Correct
DCurable deferred maintenance
Explanation
The 'before and after' method is used in partial takings (condemnation): the appraiser values the property before the taking and after, with the difference representing just compensation owed to the landowner.
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Key Terms to Know
Eminent Domain
The power of government to take private property for public use, with the requirement to pay the owner just compensation.
DepreciationA 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.
Math Concepts
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