Functional obsolescence in a property might be caused by:
Why A floor plan with an outdated or poorly designed layout Is Correct
Answer C: A floor plan with an outdated or poorly designed layout
Exam Tip: Property Valuation
Valuation questions focus on the three approaches to value: sales comparison, cost, and income. Know which approach is best for which property type. The income approach uses cap rate and NOI — memorize these formulas.
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Related North Carolina Questions
- Functional obsolescence in a NC property is caused by:Property Valuation
- External (economic) obsolescence in real estate is characterized as:Property Valuation
- In the cost approach, what term describes the loss in value due to factors outside the property boundaries, such as a nearby industrial plant?Property Valuation
- When appraising a property in the Outer Banks near the NC coast, an appraiser would consider 'functional utility' which includes:Property Valuation
Key Terms to Know
The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
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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