Property Valuation
In Ohio, a property's value is negatively affected by a nearby industrial facility. An appraiser would classify this as:
AFunctional obsolescence — incurable
BExternal obsolescence — always incurable✓ Correct
CPhysical deterioration — curable
DFunctional obsolescence — curable
Explanation
External (economic) obsolescence results from negative factors outside the property — such as a nearby industrial facility. It is always classified as incurable because the owner cannot remedy external causes.
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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.
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