Discussion 11
Discussion 11: Depreciation Challenges
Unit 11: Depreciation and Value Loss
Title: Whats the Hardest Depreciation to Fix?
Instructions:
Depreciation can be physical, functional, or external. Lets discuss its challenges.
In your post, include:
- Which type of depreciation do you think is hardest to fix? Why?
- Share an example of a building where depreciation is obvious or not so obvious?
- Have you had any personal experiences with any types of depreciation.
I worked a foreclosure appraiser for many years…..and there was almost always physical depreciation.
Side Note:
As an appraiser, I often see deferred maintenance, which happens when homeowners put off repairslike not painting, ignoring a leaky roof, or letting the carpet wear out. These things add up and can really impact a homes value.
Deferred maintenance isnt just cosmetic. It can make financing harder, especially for FHA/VA loans, and even affect insurance coverage. Lenders and buyers notice when a home isnt well-maintained, and they adjust their offers accordingly.
When Im out in the field, I look at:
- Cost to cure How much would it take to get the home back to typical market condition?
- Market impact Does the home need small fixes, or are we talking major repairs that will scare off buyers?
- Comps in similar condition I try to compare apples to appleshomes with the same level of upkeep (or lack of it).
Its always interesting to see how deferred maintenance plays into value. Some owners think their home is worth top dollar, but years of neglect can really take a toll.
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