Summary
- Physical deterioration refers to the wear and tear that buildings experience as they age, which results in a loss of value.
- Physical deterioration may be due to the action of elements such as floods, earthquakes, fire, ultraviolet sunlight, wind, etc.
- The deterioration may be curable or incurable, depending on the economic feasibility of carrying out the repairs.
What is physical deterioration?
Physical deterioration is the loss in the physical efficiency of an asset as it ages. Efficiency in this context refers to the asset's ability to produce a quantity of capital services for a given amount of inputs. It is a synonym for “wear and tear” or “ decay”.
What are the two types of physical deterioration in real estate?
Physical deterioration and functional obsolescence are further divided into two-sub categories: curable and incurable depreciation. Curable depreciation refers to a loss in value that is economically feasible to correct.
What are the two types of deterioration?
Types of deterioration in objectsChemical deterioration occurs as a result of a chemical reaction between objects and their environment. ... Biological deterioration occurs as a result of living organisms such as insects, bacteria, and mold.More items...•
What are the most common elements of physical deterioration?
Physical deterioration refers to the wear and tear that buildings experience as they age, which results in a loss of value. Physical deterioration may be due to the action of elements such as floods, earthquakes, fire, ultraviolet sunlight, wind, etc.
How do you calculate physical deterioration?
Physical deterioration is simply an effect of depreciation on an asset caused by physical means, not including economic or functional obsolescence. In order to find the physical deterioration, take the asset's anticipated physical life (how long it is supposed to last) and divide it by the effective age.
What are 3 types of depreciation in real estate?
• There are three categories (causes) of depreciation: Physical deterioration (curable or incurable);Functional obsolescence (curable or incurable); Economic obsolescence (usually incurable)subject property, and indirectly, from similar properties.
What are the factors of deterioration?
Deterioration by harmful environment agents such as light, temperature, relative humidity, pollution, and pests. Document deterioration can be accelerated by inappropriate use, storage, and display. Light can cause oxidation, which leads paper to fade or darken from chemical changes in the paper.
What are the causes of deterioration?
Physically - induced deterioration is caused by freeze–thaw loads, non-uniform volume changes, temperature gradients, abrasion, erosion, or cavitation. Chemically-induced deterioration consists of carbonation, corrosion of steel reinforcement, sulfate and acid attacks, or alkali–aggregate reactions.
What does deterioration mean?
Definition of deterioration : the action or process of becoming impaired or inferior in quality, functioning, or condition : the state of having deteriorated rust deterioration the deterioration of academic standards.
What is curable physical deterioration in real estate?
Curable Depreciation are items of physical deterioration or functional obsolescence that are economically feasible to cure. Economic feasibility is indicated if the cost to cure is equal to or less than the anticipated increase in the value of the property.
What is an example of physical obsolescence?
Examples of physical obsolescence include leaking roofs, old HVAC units, old/non-energy efficient windows, etc.
What is depreciation on a home appraisal?
The appraisal method of depreciation is a simplified method used to evaluate the economic loss in value of an asset from the beginning to the end of a reporting period. The difference between the appraised values constitutes the amount of depreciation that can be recorded. It is most often used in business valuation.
What are the two types of physical depreciation quizlet?
Physical deterioration may be in two different types of states? curable or incurable.
What is an example of physical obsolescence?
Examples of physical obsolescence include leaking roofs, old HVAC units, old/non-energy efficient windows, etc.
What is curable physical deterioration in real estate?
Curable Depreciation are items of physical deterioration or functional obsolescence that are economically feasible to cure. Economic feasibility is indicated if the cost to cure is equal to or less than the anticipated increase in the value of the property.
What two types of data does an appraiser gather?
There are generally two types of data that an appraiser will collect before making their evaluation: specific data and general data. Specific data refers to information gathered on the home itself. The home's location, amenities, upgrades, size and other factors are all considered specific data.
What is aging property?
Decline in value of property from use. The property's condition is aging. An example is plumbing deteriorating over time.
What is a factor in real estate appraisal?
Factor in real estate appraisal. A type of physical depreciation owing the lack of normal upkeep, such as broken glass and doors and discolored paint that negatively impacts the value of ...
What is a stigmatized property?
Stigmatized property is a property that home buyers might back off on closing a deal due to factors that are not related to the property’s price, structural/aesthetic conditions and ...
