Property Valuation
In South Carolina, what is 'physical deterioration' in appraisal?
ALoss in value due to design flaws
BLoss in value from wear and tear, age, and physical damage to building components✓ Correct
CLoss in value due to changes in the surrounding neighborhood
DLoss in value due to outdated systems
Explanation
Physical deterioration is the loss in value resulting from wear, tear, age, deferred maintenance, and damage to physical building components. It may be curable (economically feasible to repair) or incurable (not cost-effective to correct).
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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.
DepreciationA reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
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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