Depreciation
Depreciation (appraisal)
Loss in value from any cause, deducted in the cost approach
Appraisal depreciation is actual loss in value from three sources — physical deterioration, functional obsolescence and external obsolescence. It is a different concept from the depreciation an accountant takes for tax purposes, which is a schedule rather than an observation.
How the exam asks about it
Know all three causes and which are curable. External obsolescence is always incurable from the owner’s side, because its cause is outside the property line.
Related terms
Sitting the license exam? Find out what you actually know.
Free practice questions built to the published national content outline, with an explanation after every answer. No account, no paywall.
Independent exam preparation. Real Estate Exam Bank is not a state-approved pre-licensing course and completing anything here does not satisfy any state education requirement. Not affiliated with, endorsed by, or authorized by any state real estate commission, Pearson VUE, or PSI. Practice questions here are original study material, not the official exam.