Property Valuation
A North Dakota property with significant deferred maintenance would be described as having:
AFunctional obsolescence
BPhysical deterioration (curable deferred maintenance)✓ Correct
CEconomic obsolescence
DExcess land
Explanation
Deferred maintenance refers to items of physical deterioration that have been postponed. These are generally considered curable since the cost to repair them is less than the value they add.
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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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