Property Description and Analysis
What the exam tests
Questions test whether you can describe a property accurately enough to support adjustments, and whether you can diagnose depreciation correctly.
Site and improvements
- Site: lot size and shape, frontage and depth, corner or interior, topography, drainage, soil, utilities, access, view, flood zone, easements, zoning conformity.
- Improvements: gross living area (above grade, finished, heated, measured per ANSI for single-family), room count and function, basement finish, garage, quality and condition, effective age, remaining economic life, deferred maintenance.
- Units of comparison: price per square foot, front foot, unit, room, acre, or a gross income multiplier - chosen because the market uses them.
- Depreciation: physical deterioration (curable deferred maintenance; incurable short- and long-lived items), functional obsolescence (deficiency or superadequacy, curable or incurable), external obsolescence (outside the property, generally incurable). Use the lesser of cost to cure and loss in value.
Worked example
A 1965 ranch has 1,800 square feet above grade, a finished basement, a two-car garage, and a 20-year roof with 5 years of life left. Effective age is younger than actual because of updates. The roof is an incurable short-lived item: 5 ÷ 20 × $18,000 replacement cost = $4,500, unless market evidence shows buyers discount the full replacement cost. The finished basement is not added to gross living area.
Traps
Counting below-grade finished area as GLA. Using actual age as effective age. Deducting full cost for a curable item when the market reaction is smaller. Missing functional obsolescence in a recently updated home (poor layout, superadequacy).