Property Valuation
Vermont's 'effective age' of a building versus its actual age refers to:
AThe age of the building permits
BThe age the building appears to be based on its condition and maintenance, which may differ from its chronological age✓ Correct
CThe remaining useful life of the building
DThe age at which the building qualifies for historic preservation
Explanation
Effective age reflects the apparent condition of a building — a well-maintained 50-year-old home may have an effective age of 25 years, while a neglected 20-year-old building may appear to be much older.
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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.
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.
Net Operating Income (NOI)The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
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