Why is effective age significant in property appraisal?

Effective age is a crucial factor in property appraisal because it provides insight into the wear and tear a property has experienced in relation to its overall life expectancy. This concept contrasts with chronological age, which merely indicates how many years have passed since the property was built. Effective age takes into account various factors, such as renovations, upgrades, and maintenance that can affect a property's current condition and value.

By assessing effective age, appraisers can make informed adjustments for depreciation, which helps to determine the property's market value more accurately. A property with a younger effective age might require fewer repairs or exhibit a higher value than its actual age would suggest, while a property with an older effective age might indicate a need for significant repairs or could diminish its market appeal.

This understanding aids appraisers in arriving at a fair market value that reflects the property's true condition and potential future performance, making effective age significant in the appraisal process.