Property Valuation
The 'effective age' of a building used in appraisal may differ from its actual (chronological) age because:
AEffective age is always greater than actual age
BGood maintenance and updates can make a building function and appear newer than its actual age✓ Correct
CEffective age is determined by the county tax assessor only
DAll buildings are assumed to have an effective age of 10 years
Explanation
Effective age reflects the physical condition and functional utility of a structure, not just how many years ago it was built. A well-maintained building may have a lower effective age than its chronological age; a neglected building may have a higher effective age.
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Key Terms to Know
Appraisal
A 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.
DepreciationA reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
Deed of TrustA security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
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