Part 11 Vocab

Question 1

the number of years that have elapsed since the construction of an improvement was completed

Answer 1

actual age (aka historical or chronological age)

Question 2

The 5th step in the cost approach. In appraisal, ____ is a loss in property value from any cause; the difference between the cost of an improvement on the effective date of the appraisal and the market value of the improvement on the same date.

Answer 2

depreciation

Question 3

the period over which improvements to real property contribute to a property value.

Answer 3

economic life

note: usually shorter than physical life (how long the building is expected to stand and provide shelter). The period can be extended by means of renovations or remodeling of the improvements.

Question 4

the age of property that is based on the amount of observed deterioration and obsolescence it has sustained, which may be different from its chronological age.

Answer 4

effective age

Note: may be greater or less than its actual age, depending on the maintenance, quality, or design of a structure.

Question 5

One of the 3 major categories of depreciation. ____ is a type of depreciation that comes from outside the boundaries of a property and often locational or economic. Because the source is outside of the property, it’s generally thought of as incurable because the cost to eliminate the obsolescence is often not financially feasible but there are rare instances where moving the building to another location or buying out the adjacent use causing the detrimental factor could cure it.

Answer 5

external obsolescence

Note:

• locational factors can include proximity to detrimental factors such as air traffic noise, vehicle traffic, non-compatible land uses, and frequency of flooding
• economic factors might include high interest rates, property tax rates, an imbalance in supply and demand, and job market conditions

Question 6

One of the 3 major categories of depreciation. ___ is the impairment of functional capacity attributed to a particular property according to market tastes and standards. Can be difficult to detected and measure.

Answer 6

functional obsolescence

Note: the older a building becomes, the more likely it is to have this type of obsolescence. (actually true for all 3 types) But it is possible to have an older building without it while a new building can have it while still in blueprint stages due to poor design.
- potentially corrected or improved to lessen the effect on the value

Question 7

One of the 3 major categories of depreciation. ____ is the slow destruction (or wear and tear) of the structural components that goes on every day, from the moment a building is completed. Is usually tangible and observable.

Answer 7

physical deterioration

Physical components wear out by rust, rot, warp, peel, and settling. The process can be sped up by infestation of some sort, or action of the elements (such as moisture infiltration or forces of nature.)
- potentially corrected or improved to lessen the effect on the value

Question 8

the estimated period over which existing improvements are expected to contribute economically to a property.

Answer 8

remaining economic life

Question 9

What are the construction classifications for commercial structures?

Answer 9

A) a high rise stell-frame office building
B) mid-rise office building constructed of reinforced concrete
C) concrete tilt-wall industrial building
D) typical single-family wood-frame structure
S) Corrugated metal storage building or a DIY car wash structure

Question 10

The Quality Rating System within each Class

Answer 10

• Low-Cost:
• Average
• Good
• Excellent

Question 11

The quality rating system is called ____ for the buildings that constitute the largest group of buildings constructed, approximately 50% of all buildings. These are generally constructed for maximum economic potential. They comply with standard code construction and have simple ornamentation and finishes.

Answer 11

average

Question 12

The quality rating system is called ____ for the buildings that are referred to as “prestige” buildings. On an economic basis, part of the cost must be written off to pride of ownership and some of the income intangibly derived from advertising. These dwellings are generally built for the established professional or those with higher incomes and have some degree of expensive finishes and fixtures.

Answer 12

Excellent

Question 13

The quality rating system is called ____ for the buildings that are designed for ___ appearance, comfort, and convenience as well as an element of prestige. Ornamentation treatment is usually of higher quality and interiors are designed for upper-class rentals.

Answer 13

Good

Question 14

The quality rating system is called ____ for the buildings that are generally constructed to minimum code requirements often with little regard for architectural appearance or amenities

Answer 14

low-cost