Physical Deterioration
A loss in property value resulting from wear and tear, damage, structural failure, or neglect of the physical improvements. It is the most common form of depreciation.
Physical deterioration can be curable (deferred maintenance items such as painting, roof repair, or HVAC replacement) or incurable (long-lived structural components that are not economically feasible to replace, such as foundation, framing, and basic plumbing/electrical). Curable physical deterioration is estimated at the cost to repair. Incurable physical deterioration is estimated based on the ratio of effective age to total economic life applied to the cost of the long-lived components. Short-lived items (roof, HVAC, carpet) are evaluated separately for their remaining useful life.
Related Terms
Depreciation
A loss in value from any cause.
Functional Obsolescence
A loss in property value caused by deficiencies or superadequacies within the property itself, such as an outdated floor plan, insufficient electrical capacity, or an over-improvement relative to the neighborhood..
External Obsolescence
A loss in property value caused by factors external to the property, such as a busy highway, industrial proximity, declining neighborhood, or unfavorable zoning changes.
Effective Age
The age of a property as indicated by its condition, maintenance, and updates, which may differ from its actual (chronological) age.
Cost Approach
A valuation method that estimates value by calculating the cost to reproduce or replace the improvements, subtracting accrued depreciation, and adding the land value.
More in Property Characteristics
View allGross Living Area (GLA)
GLAThe total finished, above-grade living area of a residential property, measured in square feet.
Gross Building Area (GBA)
GBAThe total area of a building measured from the exterior walls, including all finished and unfinished, above-grade and below-grade spaces.
Below-Grade Area
Any portion of a building that is below the ground level on any side.
ANSI Z765 Measurement Standards
ANSIThe American National Standards Institute standard for measuring residential floor area.