Depreciation (Appraisal)
In appraisal, a loss in value from physical deterioration, functional obsolescence, or external obsolescence.
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What does Depreciation (Appraisal) mean on the Texas real estate exam?
Answer: In appraisal, a loss in value from physical deterioration, functional obsolescence, or external obsolescence.
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Depreciation (Appraisal) definition
In appraisal, depreciation is any loss in value of the improvements from three causes. Physical deterioration is wear and tear. Functional obsolescence is outdated design or features. External obsolescence is a loss caused by forces outside the property, such as a nearby highway or landfill.
External obsolescence is generally incurable because the owner cannot control the outside cause. This appraisal meaning is different from the tax or accounting sense of depreciation.
Source basis
Definition checked against the official sources below on .
On the exam
Exam trap
Tested in
Value & Appraisal (11 of 80 National)
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