Property Valuation
A Vermont property with contamination from a prior use (stigmatized property) may suffer:
AOnly physical depreciation
BExternal obsolescence and possibly functional obsolescence due to the stigma✓ Correct
CNo loss in value if remediated
DOnly functional obsolescence
Explanation
Contaminated or stigmatized properties may suffer external obsolescence (from neighborhood impact), functional obsolescence (from design problems caused by the stigma), and in some markets, ongoing market stigma even after remediation.
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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.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Math Concepts
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