Certified Residential Appraiser Practice Exam

What is the definition of effective age in real estate appraisal?

1. The current market value of a property

2. The total economic life of a property minus its remaining economic life

3. The original construction date of a property

4. The age of a property based on its physical condition

The correct answer is: The total economic life of a property minus its remaining economic life

Effective age is an important concept in real estate appraisal that reflects the age of a property in relation to its current condition and marketability, rather than simply its chronological age since construction. It essentially provides an assessment of how well a property has been maintained and how its condition has influenced its useful life. The definition that indicates effective age accurately captures this concept by stating that it is derived from the total economic life of a property minus its remaining economic life. This emphasizes that effective age takes into account not just how long a property has existed, but how its maintenance, renovations, and other factors have affected its longevity and value in the market. While market value, original construction date, and physical condition play roles in overall property appraisal, they do not encapsulate the nuanced assessment that effective age represents. It specifically relates to how a property’s age is perceived in the context of its functionality and desirability, making it vital for appraisers to evaluate when assessing property value.