What is the term for a decrease in property value due to wear, age, or obsolescence?

What is the term for a decrease in property value due to wear, age, or obsolescence?

• A. Appreciation
• B. Depreciation
• C. Dual Agency
• D. Code of Ethics

Answer: (B)

Depreciation refers to the reduction in the value of a property over time, stemming from various factors such as physical wear and tear, age, or functional obsolescence. This concept is crucial in real estate because it impacts the overall market value and investment potential of a property. For instance, as a building ages, its components may deteriorate or become outdated, leading to a decrease in its market appeal and financial worth. In contrast, appreciation indicates an increase in property value, which is not applicable in this scenario. Dual agency refers to a situation where one agency represents both the buyer and the seller in a transaction, and the code of ethics outlines the guidelines and moral principles that govern the real estate profession. Neither of these concepts pertains to the decline in property value described in the question. Therefore, depreciation is the most accurate term for the decrease in property value due to the reasons mentioned.

Depreciation refers to the reduction in the value of a property over time, stemming from various factors such as physical wear and tear, age, or functional obsolescence. This concept is crucial in real estate because it impacts the overall market value and investment potential of a property. For instance, as a building ages, its components may deteriorate or become outdated, leading to a decrease in its market appeal and financial worth.

In contrast, appreciation indicates an increase in property value, which is not applicable in this scenario. Dual agency refers to a situation where one agency represents both the buyer and the seller in a transaction, and the code of ethics outlines the guidelines and moral principles that govern the real estate profession. Neither of these concepts pertains to the decline in property value described in the question. Therefore, depreciation is the most accurate term for the decrease in property value due to the reasons mentioned.