California Real Estate Broker ExaminationValuation and AppraisalEasy
An appraiser is evaluating a 40-year-old apartment building that has been meticulously maintained and recently upgraded with modern amenities, including new kitchens, bathrooms, and a state-of-the-art lobby. The appraiser determines that its physical condition and utility are comparable to a 15-year-old building. What term best describes the appraiser's assessment of the building's age?
- AActual Age
- BPhysical Age
- CChronological Age
- DEffective Age
Show answer & explanationAnswer & explanation
Correct answer: D. Effective Age
Effective age is the age indicated by a property's condition and utility, rather than its chronological age. Due to excellent maintenance and upgrades, this 40-year-old building effectively functions like a 15-year-old one.
Why the other options are wrong
- A. Actual age is synonymous with chronological age.
- B. Physical age is synonymous with chronological age.
- C. Chronological age is the actual number of years since the building was constructed, which is 40 years.
Effective Age
The age of a property indicated by its condition and utility, which may be different from its chronological age due to maintenance, upgrades, or neglect.
- Reflects physical deterioration and functional obsolescence.
- Can be less than chronological age (due to improvements) or more (due to neglect).
- Used in the cost approach to estimate depreciation.
Memory trick: Different ages tell different stories about a property's life.