Chapter 7: Deprciation Flashcards
What is depreciation?
A loss in property value over time.
Does land depreciate?
No
What is Physical Deterioration?
Impairment of condition; a cause of depreciation that reflects the loss in value caused by wear and tear,disintegration, use in service, and the action of the elements.
What is Functional Obsolescence?
The impairment of functional capacity of a property according to the market tastes and standards. It may be curable or incurable.
What is External Obsolescence?
An element of depreciation; a diminution in value caused by negative externalities and Generally incurable on the part of the owner, landlord or tenant.
What is Cost to Cure?
The cost to restore an item of deferred maintenance to new or reasonable new condition.
What is Curable Depreciation?
Items of physical deterioration or functional obsolescence that are economically feasible to cure. Economic feasibility is indicated is the cost to cure is equal to or less than the anticipated increase in the value of the property.
What is incurable physical deterioration?
A form of physical deterioration that cannot be practically or economically corrected as of the date of appraisal.
What is effective age?
The age of the property that is based on the amount of observed deterioration and obsolescence it has sustained, which may be different from its chronological age.
What is economic life?
He period over which improvements to real property contributes to property value.
What is remaining economic life?
The estimated period during which improvements will continue to represent the highest and best use of the property.
What is long-lived item?
A building component with an expected remaining economic life that is the same as remaining economic life of the entire structure.
What are short-lived item?
A building component with an expected remaining economic life that is shorter than the remaining economic life of the entire structure.
What is reproduction cost?
The estimated cost to construct, at current prices as of the effective date of the appraisal, an exact duplicate or replica of the building being appraised, using the same materials, construction standards, design, layout and quality of workmanship and embodying all the deficiencies, superadequacies and obsolescence of the subject building.
What is replacement cost?
The estimated cost to construct, at current prices as of the effective appraisal date, a building with utility equivalent to the building being appraised, using modern materials and current standards, design and layout.
