Property Valuation
In South Dakota, which type of depreciation is considered 'curable'?
AExternal obsolescence from a nearby highway
BDeferred maintenance like a leaky roof that costs less to repair than the value it adds✓ Correct
CEconomic decline of the surrounding neighborhood
DLoss in value due to regional economic conditions
Explanation
Curable depreciation refers to physical or functional issues that are cost-effective to repair (the cost of the fix is less than the resulting value increase). Deferred maintenance items like a leaky roof, deteriorated paint, or worn carpet are typically curable.
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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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