Property Valuation
Which of the following is an example of physical deterioration (curable) in a South Carolina property?
AFoundation settling requiring major structural repair
BWorn carpet that needs replacement✓ Correct
CA declining neighborhood
DAn outdated floor plan
Explanation
Curable physical deterioration refers to items in need of repair or replacement where the cost to cure does not exceed the increase in value. Worn carpet is a classic example of curable physical deterioration.
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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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