CPE Flashcards
What is Functional Obsolescence?
functional utility is the overall usefulness and desirability of a property
loss of value in a property due to changes in style, taste, etc.
it’s the inability to work the way it used to
What is External Obsolescence?
loss in value as a result of impairment in utility and desirability caused by factors outside the property boundaries
What is Physical Deterioration?
a loss in value due to normal wear and tear and disintegration
deterioration CANNOT be avoided
What is a Fixer Upper?
most common example of single family residence
What is categorized as curable or incurable?
physical deterioration and functional obsolescence
What is Super Structure?
skeleton of the building ALWAYS physically incurable
How many methods are used to measure depreciation and what are they?
5 methods (2 indirect and 3 direct)
indirect - sales comparison and capitalization
direct - economic age-life, modified economic age-life and breakdown method
What is Direct Method?
involves measuring the depreciation of subject property
LOOKING MYSELF
What is Indirect Method?
use sales of comparable properties (market extraction) and income loss from properties to measure depreciation
LOOKING ONLINE
What are the primary methods used by most appraisers to estimate the total depreciation of a property?
sales comparison (indirect method) and economic age-life (direct method)
Depreciation of the subject property is based on what?
the depreciation of comparable sales in the market
recently sold properties of similar age, condition, and desirability
What is the Mass Appraisal Method?
depreciation is usually estimated by using depreciation tables
What is the primary method of estimating depreciation in the assessors office?
developing depreciation tables from comparable sales in mass appraisal
What are the 2 Indirect Methods?
Sales Comparison and Capitalization
What is Physical Life?
total period a building lasts or is expected to last rather than its economic life
What is Economic Life?
total number of years during which the improvements on the site/land contribute to total property value
What is Effective Age?
the age of property based on the amount of observed deterioration
Age and Life Relationships of Depreciation
Chronological Age
Effective Age + Remaining Economic Age =
Total Economic Life
What is Remaining Economic Life?
estimated number of years remaining during which the improvements continue to contribute to total property value
Total Economic Life - Effective Age =
Remaining Economic Life
In determining the period during which the improvements continue to contribute to total property value the apprasier must what?
must consider the present condition of the improvements AND other known factors that might affect its future use
What is Actual Age?
amount of time that passed between construction of an improvement and the date of appraisal
also known as historical or chronological age, it is a fact or objective figure
What is Economic Age-life Method? (Straight-Life)
mechanical method of handling depreciation borrowed from the accounting profession3
allocates a uniform percentage of value loss each year over the economic life of the improvement
